Video highlights of Innovation Masterclass

What is innovation? – Professor James Fleck

Innovation and technology – Adrian Simpson, SAP & Imran Razzaq, Microsoft 

Innovation and leadership – Ken Keir, Honda Motor Europe & David Harrison, True Potential

Honda and the joy of engineering

Guest blogger:

bridgetgrenvillecleaveBridget Grenville-Cleave, Open University Business School MBA Alumnus, MAPP graduate of the University of East London, is a UK-based positive psychology consultant, trainer and writer
 
I recently had the privilege of attending an Open University Business School Masterclass and networking event at which Ken Keir, the Executive Vice President of Honda Motor Europe, talked about the way innovation, the  lifeblood of the Honda company, drives its success.

Honda - the Power of Dreams

Even though he focused on Honda’s R&D philosophy, explaining for example how, in recessionary times, the company goes against the tide and invests more in R&D rather than less, by the time we reached slide 5 of the presentation on the Honda strategy, vision, values, and behavior, it was pretty clear to me that here is a company founded on positive psychology principles.

What intrigued me was that Ken Keir didn’t mention positive psychology once. For all I know, he has never even heard of it. However, if you look at how Honda operates strategically, how it works day-to-day as well as the kind of language it uses to describe the business, it’s pretty clear that it’s a strengths-based company through and through.

How did I reach this conclusion?

An Organisation Based on Three Joys

Quite simply, Honda is a company which lives and breathes its values.

Back in 1951 the founder, Mr Soichiro Honda, outlined in a Management Policy document the principles on which the Honda Company is based.

It may surprise you to discover that these are:

  1. The joy of making
  2. The joy of selling
  3. The joy of buying

Honda Advertising Poster

Now many corporate leaders might raise their eyebrows at this point and baulk slightly at the use of the word joy. If you’ve worked in the corporate environment you’ll know how pretty much any mention of emotions is unwelcome, especially positive ones like joy, kindness, and awe. The only time emotion really gets its foot over the corporate threshold is when we’re talking about that rather rational and sanitized topic, emotional intelligence. The difference here is that Honda brings these three values alive. It lives and breathes them in everything it does. You could say that the Three Joys are its raison d’être.

The Joy of Making

Take the joy of making. Ordinarily engineering isn’t a term which lights many fires, unless you happen to be an engineer. Engineers are not known for their people skills nor their positive emotion. In fact engineering tends to be perceived as a bit dull. Dry even. And definitely dusty. Engineering is a highly technical, specialized domain, dominated by deep-thinking, serious left-brainers.

But just read Soichiro Honda’s explanation of the first joy:

the joy of producing…is a joy known only to the engineer. Just as the Creator used an abundant will to create in making all the things that exist in the natural universe, so the engineer uses his own ideas to create products and contribute to society.”

So what does this tell us? Firstly, that the joy of making, the engineering that is at the heart of the Honda company, is its strength. Secondly, that Honda encourages its engineers to embrace and play to their strengths, rather than try to be something they’re not. Thirdly, Soichiro Honda clearly saw that using this strength in the service of something greater was crucially important to the success of his company. More than half a century later positive psychology research tells us that this is the essence of finding meaning and a key to flourishing.

Mr Honda continued,

This is a happiness that can hardly be compared to anything else. Furthermore, when that product is of superior quality so that society welcomes it, the engineer’s joy is absolutely not to be surpassed. As an engineer myself, I am constantly working in the hope of making this kind of product.”

Not only does he refer to joy, but also to happiness and hope.

The Joy of Selling

The second joy, the joy of selling, arises naturally from the creation and manufacturing of high quality, high performing, reasonably priced products.

“…it goes without saying that the people who engage in selling it will experience joy… What sells well generates profits, as well as pride and happiness in handling those items…”

Students of positive psychology will have come across the study by Martin Seligman that suggests that optimistic sales people are more successful at selling. What sales people wouldn’t be passionate and optimistic about selling a product that they knew would delight their customer?

The Joy of Buying

The third joy, the joy of buying, is the sole preserve of the customer, the person who buys a Honda, whether that’s a motorbike, a lawnmower with a Honda engine, or a car. I’m currently driving my 4th Honda, so I can personally vouch for the joy of buying. The way Soichiro Honda describes this third value makes you believe that other people’s happiness is the sole reason the company exists:

“It is neither the manufacturer nor the dealer that best knows the value of the product and passes final judgment on it. Rather, it is none other than the purchaser who uses the product in his daily life. There is happiness in thinking, “Oh, I’m so glad I bought this.” This joy is the garland that is placed upon the product’s value. I am quietly confident that the value of our company’s products is well advertised by those products themselves. This is because I believe that they give joy to the people who buy them.”

So in these three, deceptively short and simple values, we have a whole positive psychology philosophy, culture, and way of doing business. As Soichiro Honda concluded,

The Three Joys form our company’s motto. I am devoting all my strengths in order to bring them to reality.’

Learning from Honda: Creating Your Own Company Joys?

So what can we learn from Honda’s Three Joys? I’d suggest the following:

  1. Stick to what you’re good at! Allow, encourage and facilitate all your employees to play to their unique strengths. This assumes that a) you know what their strengths are and b) you need these strengths in your company.
  2. Don’t shy away from positive emotions at work. They have a place in every succesMy Honda Keyssful company. If this seems a bit scary, you could start by looking at how to create a more healthy balance of right brain and left brain, feeling and thinking, intuition and analysis. Alternatively, if you had to suggest Three Joys for your company, what would they be and why?
  3. Make meaning important. People want to know how the work they do benefits others, especially customers, clients, patients and society generally. Help them make those connections and find ways to reinforce them.

When I heard Ken Keir speak, I was expecting only to find out about Honda’s innovation and creativity. Instead, I also discovered a company imbued with positive psychology principles. Every time I drive my Honda I’ll be thinking about the Three Joys. And every time I meet an engineer I’ll be reminded of why you should play to your strengths.

(This article was originally published on PositivePsychologyNews.com on 3rd Dec 2012.)

Bridget Grenville-Cleave, MAPP graduate of the University of East London, is a UK-based positive psychology consultant, trainer and writer. She is author of Introducing Positive Psychology: A Practical Guide (2012), and The Happiness Equation with Dr Ilona Boniwell. She regularly facilitates school well-being programs and Positive Psychology Masterclasses for personal and professional development. Find her on LinkedIn, Facebook and Twitter @BridgetGC. WebsiteFull bio. Her articles are here.


References

Honda, Soichiro (1951). The Three Joys. Honda Monthly #4.

Britton, K. (2009). Laugh-o-Meters Needed at Work. Positive Psychology News Daily.

Seligman, M. E. P. & Schulman, P. (1986). Explanatory style as a predictor of productivity and quitting among life insurance sales agents. Journal of Personality and Social Psychology, 50(4), 832-838.

Images

Honda the power of dreams courtesy of by S1m0nB3rry

You meet the nicest people on a Honda courtesy of gingerbeardman

My Honda keys

Innovation Masterclass Webinar Tuesday 4 December 2012

Following the successful Innovation Masterclass held in London on 15 November we are holding a free webinar on Tuesday 4 December at 19.00. The webinar will offer our global alumni network the opportunity to hear video perspectives on innovation from many of the event’s speakers. The facilitated event will also allow delegates to participate in Q&A and interactive sessions.

The hour long webinar will include:

  • What is innovation? A perspective from Professor James Fleck
  • Technology and innovation: perspectives from both Adrian Simpson, Chief Technology Officer, SAP and Imran Razzaq, Microsoft Central East Europe Cloud Lead
  • Leadership: what are the qualities that foster innovation? Perspectives from Ken Keir, Executive Vice President, Honda Motor Europe and David Harrison, Entrepreneur and Founder and Managing Partner, True Potential.

To register for the event, please email janet.barker@open.ac.uk

First event hailed a big success

Business Perspectives event
Evan Davis shares his perspectives on innovation

Did you miss the inaugural Business Perspectives event at the Cumberland Hotel in London last week? Do not despair as we intend to bring highlights and insights from the day at a webinar on 4th December. Full details of the webinar and how to sign up will be posted here shortly.

The event itself was attended by over 100 practising managers, industry leaders and business academics, and provided a thriving hub of perspectives on innovation, both in the room and on Twitter (#ou_bp).

During the evening session our Visiting Professor and BBC Economics Editor Evan Davis was joined by Ken Keir, Executive Vice President, Honda Motor Europe, whilst Professor James Fleck then joined them both for a lively question and answer session.

The daytime masterclass considered the organisational structures, strategies and cultures needed to cultivate and support innovation, with insights and perspectives from Adrian Simpson (SAP), Win Dhat (Kates Kesler), David Harrison (True Potential), Dr Leslie Budd (OUBS), Imran Razzaq (Microsoft) and Professor James Fleck.

Were you there? How about sharing your perspective of the event on our blog site?

– Shasha Wang, Digital Development Manager, OUBS

Is preaching innovation to drug makers more relevant than ever?

Guest blogger:

Ourania KoumiOurania Koumi, The Open University Business School MBA student

A rich pipeline of potentially marketable drug compounds is the lifeblood of the pharmaceutical industry and the first thing that used to come to mind, when as student, I was applying to companies for jobs. When I was labouring day and night against a lab bench playing paper chase, the thought never occurred to me that one day I would be following the advice of my academic teachers, that is to swap a career in academia for one in a drug company. They warned me that any new ideas I had would have to mould into more restrictive and complex norms, depending on company size. I would have to adapt to corporate culture less forgiving to sudden bursts of innovative trial and error approaches to decision making. But, the magic world of reinvested profit back into research for new drugs could have put the worries of any researcher for funding to rest.

Of course, in my mind, innovation was only synonymous to successful drug development.

I later discovered only part of this held true. It is not enough that a company needs to invest in a costly 15 years of research to decide on a potential new drug. Marketing a newly developed compound is a bumpy road, not for the faint-hearted. It involves many issues; an increasingly demanding regulatory approval process, and a short five-year period in which the compound needs to render profit for the company before patent expires. All bets are on, in a rapidly changing external market which pushes for more at a lower cost, driven by growing generics competition.

Thus, examples of innovation are contingent on dynamic market demands.

  • Optimising Research & Development (R&D) spending: The industry has been blamed for falling behind on drug design innovation1. Small biotech companies, which are beginning to take over from big corporations in producing high quality, innovative compounds targeting niche disease areas, do so due to their focus on science, agile decision making processes, inspired talent management and rigorous financial restraint1.  As one example, Vertex is on its way to marketing yet another compound shortly after the launch of a first innovative therapy for cystic fibrosis in Europe, while partnering with GSK and Jansen to market new Hepatitis C compounds2.

At the same time, bigger companies seem to be in a state of constant regrouping, where there is room for improvement in communication and in the development of the right mixture of metrics, which can boost productivity and reduce costs. As Knott hints at in her recent HBR article last May3, one reason why ‘R&D spending does not correlate with market value or growth’ lies in the way companies fail to measure productivity of the R&D. Even with universal, uniform and reliable metrics based on Edwards Demings’ TQM system, Knott points out that big companies will have to reduce R&D costs to make up for patent erosion, while simultaneously managing for increased R&D productivity. But for most, the new metrics system may actually justify greater R&D budgets3. While R&D spending optimisation seems to be work in progress3, there are still some successful open innovation strategies like Merck’s initiative of employee idea crowd sourcing to encourage such transformational innovations 3,10.

Is continuous innovation key to success within the pharmaceutical industry?

Companies that are doing better, tend to follow a mixture of strategic imperatives coupled with optimal risk averse financial management in continuous innovation, e.g. polypill design or administering an existing compound in a new drug delivery system, like Ceglene’s Abraxane approved to treat breast and lung cancer4.

  • Technology boosts productivity at less cost: Business analytics also present a hot new technological innovation, useful in contributing to cutting costs and improving productivity across the value chain of new product development and marketing. For example, Vertex designs clinical trials in record time using analytical business tools to help minimise errors in trial design and consequently cut costs, optimising the probability of high quality end trial outcomes5.
  • Organisational restructuring to offset patent erosion: The more successful companies have followed what Christensen calls disruptive innovation strategy in organising a separate business unit, or independent subsidiary company, to continue marketing their own branded generics, e.g. Novartis’s Sandoz6. In that way, although the subsidiary is functionally and organisationally separate from the mother company, the profits are kept in house6. A hybrid of that strategy is to flexibly diversify business activity according to the needs of the market, as Abbott did after buying Piramal to start selling cheap, generic drugs in India­­7.
  • Marketing strategy optimisation: Fast and effective new customer segmentation and targeting can also be achieved by the use of social media platforms, an effective way of bringing the company closer to its customers and consumers. A social media platform developed to inform, educate and interact with patients was developed by Lilly & Co, which combined YouTube, Facebook and Twitter and was launched in September 20108, despite regulatory impediments that the company faced. Over the last 3 years, more than 74%9 of companies have adopted this addition to their communication strategy, thus bridging the gap between the company and its end-users, in the hope of drawing marketing and competitive intelligence insights and improving corporate image.

Pipelines may have helped thus far­6, but investors are not optimistic that results may be as encouraging in 2013. It may be that under extreme pricing pressures the innovation imperative for drug companies in Europe and the US seems impossible to tackle, while sales of new products hardly cover losses from patent erosion in a competing generics market and an external environment driven by regulatory and pricing pressures. Rather than a deviation from the classic Ansoff framework, Nagji and Tuff10 suggest that a winning strategy may be a combination of innovative approaches at the right equilibrium. Managing existing drug/expiries, expanding adjacent ‘new to the company’ business, and developing new drugs covering the ever growing epidemiological needs, especially in the emerging markets, within the same company, may be mandatory.

Total innovation management has worked for Technology and Telecommunications’ markets10. It may be the right survival tactic for pharmaceutical companies, as just having a pipeline of new drugs, just maintaining existing customers with face-to-face sales calls, just relying on marketing to cover for R&D delays, or selling in just Europe or the US, does not seem to cut it in today’s drug market.

References
1. ‘Pharma 2020: Which Path Will you Take?’, (2007) PricewaterhouseCoopers Pharmaceuticals: ConnectThinking: 1-48

2. Vertex Q3 2012; http://investors.vrtx.com/releases.cfm

3. Knott A., (2012) ‘The trillion dollar R&D fix’, HBR, May: 77-82

4. Abraxane SPC; http://www.abraxane.com/hcp/

5. http://www.accenture.com/SiteCollectionDocuments/PDF/HLSCoA.pdf

6. Novartis Q3 2012 Results; http://www.sandoz.com/media_center/news/2012/press_releases/2012_10_25_Q3_results.shtml

7. The Economist (2012) ‘Battling borderless bugs: Western and emerging-market drug firms are invading each other’s turf’, 12 Jan: Business print edition; http://www.economist.com/node/21542410

8. Ghinn, D. (2012) ‘Pharma gets social’, Jan: http://www.pharmaphorum.com/2012/07/17/pharma-social-lillypad-provides-platform-lillys-corporate-engagement/

9. Cognizant Report (2012) ‘74% of Pharma companies have adopted Social Media…’; Jan: http://www.cognizant.com/InsightsWhitepapers/Adaptive-Social-Media-in-Life-Sciences.pdf

10. Nagji, B. & Tuff, G. (2012) ‘Managing your Innovation Portfolio’, HBR May: 5-11

Photo credit: Micah Taylor via photopin cc

Disclaimer: The views posted in this article are the result of personal reflective thinking on the already published articles, analyses and reports stated in the References; the current conclusions hypothetical and subject to change in light of new, openly published evidence. The author is currently an MBA student at The Open University and bears no relationship, commercial or otherwise, with the companies mentioned, which she has used randomly to exemplify innovation strategies.

Innovation or innovators?

David Harrison, Managing Partner of True Potential LLP, The Open University MBA alumnus

Innovation or innovators

Edited transcript of Business Perspectives Video: Innovation or innovators?

“Most of the organisations I see, they train everybody”

“I have observed first hand that it’s about selection. I’m not necessarily a nature versus nurture addict if you like, but if I was, it would be nature. But if you look at any elite organisation in the world, it will probably be down to selection. So if you look at British Special Forces, as an example away from financial services, they don’t train people until they’ve selected them, on a course of selection criteria which rules out just about every human being possible.  The ones that get through, they train them.”

“So what people do is set criteria, some sort of hurdle that most people can’t get over, “therefore they are weak, and let’s train that weakness”. And I don’t. I think I ignore weakness, I work with strengths.  One strength can be innovation that you have within individuals in an organisation, but there will be other individuals who don’t have that as a strength. People then tend to get angry and say “everyone is creative”, “are you saying I’m boring and dull or whatever?”. And if you are in finance, you may say “I wanted to be in finance, boring and dull, I didn’t want to make a mistake and cost everybody millions of pounds”. So there has to be those people, and those people, I believe, are happy doing that job, because they are naturally endowed with the ability to be careful, to be numerate, to do the things which other people may find boring. They probably think that all creative people are glib, they are chaotic, they create a real mess for these people to tidy up.  And I think it’s just recognising in an organisation that there are different people. And I want to separate that form of creativity, that form of real innovation, which may find you in a different market, with a different product and so on and so forth, from what I call the ordinary everyday creativity, which most people have, which can also lead by the way to big leaps, such as improving a process we’ve already got.

So if you look at the organisation we have got, we have got lots of people, they are mostly partners, and I think that helps creativity because essentially what they are doing is,  if they bring something to us, then it is to their advantage as well. The more they do of that, the more shares they are likely to have, the more important they are going to be in terms of value for the organisation.”

Bounded Innovation – the limitations of organisational reality

Guest blogger:

Fiona Beukes Fiona Beukes, The Open University MBA, UK Marketing specialist, BNY Mellon
 

Innovation in some respects is like the Holy Grail of business – How do you do it: disruptive or continuous? How do you foster it in your organisation: Incentives? Creative downtime? Hire the right talent? Although these are obviously worthy avenues to explore, they do take time to implement.

man with bulb head
Is your organisation agile enough to foster innovation?

I think many organisations are hampered by their internal environment which prevents a dynamic, agile response to market change. There is definitely a tension, in my view, between Grant’s internal resource perspective and Porter’s economic view of the workings of the external business environment.

From a practical perspective, I also think many companies find it hard to innovate through disruptive change. In my view, the larger and larger an organisation becomes the more bounded I feel it is to its BAU (Business as Usual) and the day-to-day constraints that just “getting things done” place on its internal environment.

The leaner, younger, more nimble upstart is likely to steal a larger company’s thunder and swiftly re-engineer the external environment. Think of Apple launching the iPod – a lower quality sound compared to compact discs so Sony engineers believed at the time – a product that rapidly caught the attention of a mass market interested in synching their PC to a portable, lighter device. In the end, a good quality product (CDs) lost out to unperceived customers’ needs and wants (iPods).

I think it is this disconnection from the customer which fosters continuous improvement in an organisation rather than disruptive market change. As a product or service exists already and a level of stakeholder engagement is in play – internally and externally – it becomes safer to adapt and improve a product or service rather than launch new ones. Why ruin a good thing?

It is also seems safer to improve the operational side of an organisation by being leaner and more cost-effective rather than radically altering the product or service and risk a customer backlash: something Coca-Cola experienced when they launched new coke in the 1980s. Why risk upsetting the apple cart, and more importantly, an organisation’s shareholders by changing the status quo?

There are certainly many barriers to innovation in organisations – people, culture, shareholders to name a few – and varying ways in which to be innovative. In my mind, how an organisation chooses to innovate is contingent on a range of external and internal factors. And also its strategic, longer-term vision of what the future holds.

To read more of Fiona’s articles, visit her blog.

The Middle East Could Be a Cradle of Innovation

Guest blogger:

Christopher M. Schroeder
 Christopher M. Schroeder, Washington, D.C.- and New York-based entrepreneur, venture investor, and former CEO of the online content and social platform start-up healthcentral.com 

This article was first published on Harvard Business Review, October 16, 2012.

We in the West tend to think of innovation as the next, new, shiny, tech, globally-accepted thing. But in emerging growth markets, new access to even existing technologies (e.g., higher-speed broadband, mobile phones, smart devices), can lead to fresh and surprising thinking about local and regional problems, and one day these over-looked corners of the globe may produce world-class innovations as a result.

Man using iPhone during Kuwait election 2012
Smart phones become increasingly popular in the Middle East

Consider mobile devices in Africa. Throughout the continent — and this is true throughout other emerging markets too — millions of people are glued to their cell phones. Since Africans were never tethered to landlines, innovation has been astounding. Kenya’s M-Pesa, for example, allows customers to withdraw and deposit money via text message. The company is now one of the largest mobile cash-transaction companies in the world — roughly 20% of the country’s GDP passes through it. The growth doesn’t stop there. With hundreds of thousands of cell towers providing reception to the most rural corners of the world, mobile providers have been compelled to build their own power generators. As a result, they’ve spawned entire ecosystems of entrepreneurs who are using the excess electricity to power local towns and build community charging stations. And thanks to “social entrepreneurs,” people with little voice are using mobile technology to report crime and corruption to authorities while holding the “powers that be” accountable — which was impossible even a few years ago.

Long before the Arab uprising in 2010 — and uninhibited by uncertainty and instability today — Middle East entrepreneurs have used innovation to overcome challenges and to find new opportunities for growth. As I have suggested in a recent post here on HBR, the Arab world alone represents a large and hungry consumer market. So it’s no surprise that companies in the region are finding innovative ways to reach consumers. In the face of country-by-country regulatory complexity, Aramex, the region’s largest logistics company, created Shop and Ship, which allows customers to order products from nearly any e-tailer in the U.S. and China and eventually the Middle East. It’s a seamless process. Aramex receives the ordered goods at its facilities, takes care of all the bureaucratic headaches, and then delivers the goods right to the shopper.

Other e-commerce companies are overcoming obstacles in innovative ways as well. With only two million credit card users in the Middle East, and even fewer comfortable using their cards online, and with well over 60% of package deliveries paid COD, payment services create as much friction as regulatory concerns. But innovators such as CashU have created safe gateways (e.g., cash cards) for buyers who are weary about shopping online and on mobile devices.

The fact that new markets are using technology to solve local and regional problems is no longer surprising. But what’s provocative, for me, is at some point these efforts will yield globally-competitive innovation as well. As Dartmouth Professors Vijay Govindarajan and Chris Trimble argue in their new book on innovation in emerging markets, Reverse Innovation: “It is easy to understand why a poor man would want a rich man’s product. But why would a rich man ever want a poor man’s product? The answer is that under certain circumstances, it offers new, unexpected or long-overlooked value.”

This is why, when I travel throughout the Middle East, I look hard for situations and experiences that could foster innovation on a global scale. Simply put, the Middle East — despite its uncertainty — is rife with potential. This is a region that barely knew phone lines, yet mobile penetration regularly nears 200%. And when cheap smart phones (below $40) hit the market — as they have just started to in Africa — mass adoption of mobile computing will follow. What might this market have to teach the world about the future of mobile innovation?

There are other opportunities for innovation as well. The largest untapped resource of fresh water in the world lies beneath the Egyptian-Libyan desert but there isn’t an adequate, cost-efficient, and reliable way to deliver petroleum in order to pump it. What innovation in solar pumping and agriculture may lie here? And what about the millions of people who communicated and coordinated on mobile devices and Twitter and Facebook during the Arab uprisings? They told stories. They toppled regimes. Might the next great global social network rise from these experiences?

There was a day, in my lifetime, when no one could imagine that Japan, or Finland, or Korea would become leaders in hardware innovation or computer gaming. True, there hasn’t been a great, global software innovation outside of the United States in years, arguably ever. But as the region continues to use creativity to overcome its unique problems and as long as access to inexpensive technology continues to spread, “made in MENA” doesn’t seem that far off.

 

Engineering the future

Why large scale infrastructure should not be too technologically innovative.

Evan Davis explains the reasons and shares  his views of the challenges to refreshing the UK infrastructure, reflecting on his research for Built in Britain, an OU/BBC co-production.

Evan Davis interview

To learn more about Built in Britain series and explore What Makes Britain? timeline, visit OpenLearn website.