December 2015 – Epinoya

Why is Fostering Innovation Hard?

There have been many articles and books addressing how to “do” innovation and enumerate the various barriers. Innovation has been identified with increased competitiveness and even survival in today’s economy. However, the lack of innovation today has been decried by pundits and even governments. Companies, heralded in their early days as innovators, seem to flounder after a while. Other companies, who see the danger of being made irrelevant and try to become innovative, struggle to even break out of their own box. What is wrong? Why is innovation so hard and why is it so hard to sustain?

The answer is that an innovative company is in a metastable state. It is occupying a higher energy state. The barrier that prevents the company from falling back into a lower state of status quo is fairly low; lower for some than others. The barriers to innovation are the steep wall of energy one must scale to reach the metastable state. All the ways to kill innovation are the shallow wall of energy that the company can fall over back to the ground state. Maintaining the innovative state requires vigilance and work. It requires building a culture from the BoD and CEO to the janitorial staff. It requires retraining thought processes and breaking long held paradigms. Innovation has to become part of a company’s DNA. When it does the barrier to status quo gets higher, but not insurmountable. What does an innovative company look like? The profile I have is a composite of the innovative companies I have come into contact with. Most have most of the qualities in common. Several no longer exist because innovation was killed and subsequently the company, as well.

So, what does an innovative company look like? Is it the no-dress-code, flex-time, free-food, perks-plus environment? These might help with the current generation employee, but there are more fundamental characteristics of an innovative organization.

Company leadership is committed to innovation. The leadership invests in the employees and trusts them. In turn, the employees develop a trust in the leadership.
There is a “no fear”, “can do” mind-set throughout all functions in the company. The answer to the question, “Is it possible?” is not “No”, but “Not yet”.
Many in the company are well educated, but all are constantly learning.
There is a pervasive curiosity; consistently asking “Why?” and “What if?”
There is also a “maker” mentality and the discipline to execute the processes to launch the new product or process.
An innovative company will listen to the voice of the customer, but can discern real versus perceived needs.
An innovative company is not efficient. Failure costs money; as does finding your way to discovery. That’s why you need high profit margins.

Typically, we think of Apple, Google, or Facebook as being exemplary. But I also think of the company I joined, fresh out of school, Hughes Aircraft. Hughes was a defense contractor with all of the restrictive regulations one associates with working with the DoD. Yet, they gave us practical laser technologies, wire bonding for semiconductor packaging, LCD technology employed in the first digital desktop projectors, 3D surround sound, back-of-the-seat in-flight entertainment, satellite TV, digital X-ray imaging, and ion propulsion engines for space travel. Well, the ion propulsion was a little early. It was repurposed into reactive ion etching used in semiconductor processing. One of the characteristics of Hughes leadership is that the CEO, up until the last one, was an engineer, often one who rose through the ranks. Hughes was a large company with about 90,000 employees at its peak. Not all the divisions fit the above profile. But two I worked at and others I worked with did. I remember a senior Air Force manager wishing aloud at a project review meeting for a particular microwave component with characteristics that were unprecedented. One of the project engineers slipped out during a break and returned with some samples and data. He presented the package to the slack-jawed manager with the question, “Like this?” We were provided means to explore and push boundaries, which enabled the engineer to anticipate needs before they were even voiced.

M&A has been identified as one of the ways to kill innovation. This was certainly a danger for Hughes when it was acquired by GM. There was some “brain-drain” when some of the more creative engineers left the company. The CEO was able to maintain the course and provided an additional direction toward automotive challenges. Some of the projects started were: heads up displays, digital instrument clusters, remote key locks, rear object detection, and collision avoidance.

However, it took a change in leadership to bring the company to its knees. The new CEO was not technically trained and was focused solely reducing costs. As cuts were made, more creative engineers left the company, fewer contracts were won, the bottom line suffered and therefore more cuts were made. The company was in a death spiral until it was sold off in parts to competitors. The loss of intellectual property was incalculable.

This is just one case I can cite from experience of an innovative company that was brought down because of a couple of the innovation killers that have been identified.

Sometimes You Need Transitional Products That Also Differentiate

DOA Launch
When I joined Brooks Instrument, they were just completing a product launch for their new digital mass flow controller (MFC). The product launch received no response. The customer interface was digital and the semiconductor customers had not yet transitioned from analog interfaces to digital. I then had the opportunity to restart the development cycle to correct the short-comings of the DOA product. Some of the things we addressed were the lack of modular design in both the hardware and software. We spec’d out a new, more powerful processor to handle the expected performance bandwidth we needed to handle the new product definition. The main key was a dual interface that could be analog or digital. This provided the customer performance and feature improvement over the traditional analog MFCs while maintaining the legacy interface. But we also had a new technology coming down the pipe that would leverage the full digital design.
Leverage New Technology for Customer Benefit
Brooks had engaged a technology partner to develop multi-calibration capability. At the time, all MFCs were calibrated to a single gas. If you needed a MFC for a different gas you had to buy another one. This created challenges trying to find the best mix of spares in inventory. If the customers could get multiple calibrations on a single MFC they could reduce the number of spares in stock. Prior to releasing the product I wrote an article exposing the lack of accuracy in the traditional calibration technique. We were going to calibrate using a much more accurate method and provide multiple calibration capability. The market received the product well and we were first with a market differentiator. The new product enabled us to penetrate companies that we were not able to penetrate before.
Differentiation That Makes a Difference
An example of this occurred when my lead engineer and I accompanied our sales rep to a semiconductor fab in Texas. Up until this point, we had zero sales with this customer. The reception was cold, if not almost hostile. I don’t know how our sales guy managed to get the meeting, but we were there. We filed into a conference room with a long table. The Brooks contingent sat at one end nearest the projector and screen. The fab manager and two of his engineering managers sat at the other end. It did not take an expert in body language to see that we had our work cut out. I led off the presentation introducing the product, outlining the benefits in general. Then I turned the presentation over to my engineer. As he explained the technology and how it would benefit the fab operations, I noticed that the engineers began leaning forward and then chair-hopping closer, all the while asking questions. By the time my engineer finished, the fab engineers were sitting next to us. I stood and asked if there were any more questions. The fab manager turned to our sales guy and asked “So, how much would it cost to convert the fab?”

Where Do You Get Your Ideas?

In my previous post I talked about motivations for innovation. The example I focused on was Brooks Instrument’s Coriolis MFC (mass flow controller). So how did we come up with this idea and why did we think it would work?

Where do you get ideas?

I am convinced that there is no magic formula that works in every case. There are a variety of good approaches for getting ideas that won’t work sometimes. The key is to stay flexible and if the results are unsatisfying try a different approach. In Brook’s case we used a “seeded” brainstorming method. I call it “seeded” in that we stablished a context and knowledge baseline before we launched into the brainstorming to expand and then filter ideas to the mostly likely to succeed.

I invited technologists from our sister divisions and subsidiaries to the seminar and included some consultants that had already been screened by Emerson corporate. Several presented technologies that were known and some potential from external ideas. I presented my idea that I had originally pitched to Unit Instruments. Obviously, most of us came with a predisposition toward a particular idea. To keep the effects of prejudice to a minimum, we exposed the prejudices and requested that the participants keep open minds. Here is where we conducted the brainstorming collecting as many ideas as we could. We then discussed product feasibility, time to market, expected development costs, risk factors, among other topics to drill down to a final candidate.

One of our sister subsidiaries was Micro Motion whose founder had invented the Coriolis flow sensor. Coriolis sensors respond directly to mass flow. There are no conversions or inferences required to obtain a measurement of mass flow as with other mass flow sensing technologies. There was considerable IP protection and the technology could obsolete the multi-calibration capability that we had just developed. This would not cannibalize our current product line initially since our initial application would be for liquid flow. Our main products were for gas and vapor flow. The liquid flow products throughout the industry were known to be weak in meeting customer needs. A Coriolis based MFC for liquid applications would expand our product offerings and allow for a reasonable return on investment from the Digital Thermal MFCs. Eventually, the Coriolis MFCs would expand to include gas and vapor applications displacing the digital thermal MFCs. Ok, so we had a technical direction to head in, but what was the product going to be like?