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Thursday 22nd October 23:34 (UK)

New innovation videos

March 14th, 2017

Screen shot at beginningTwo new videos have been added to the our YouTube channel ‘Business Innovator’. The Business Innovator channel is our new channel for sharing innovation approaches and our professional experience with a wide community of businesses, change agents and students. Our videos will be intentionally short – to provide interest and insights within ‘bite-sized’ chunks.

The first new video introduces business innovation as a ‘journey to value’ and explains how innovation mastery comes from the application of an holistic and systematic approach to innovation within a business. Watch video here.

The second video looks at innovating service design and delivery in Professional Service firms and identifies 5 key success factors, based on Codexx project experience. Watch video here.

We hope you find them useful – and we look forward to your comments.

Let us know areas you would like us to cover in future videos.

New book – ‘Sowing the seeds of business transformation’

February 21st, 2017

Alastair Ross’s new book Sowing the seeds of business transformation was published on the 18th February and is available in paperback on Amazon. The book is aimed at change leaders who are seeking inspiration and guidance for transformation in their own businesses – in both industrial and knowledge intensive service sectors.

Cover with text for Codexx blog

It is a practical guide, based on project work and detailed case studies and is suitable for transformation projects in a single service or process, a function or department, business unit or firm wide.

Sowing the seeds of business transformation examines key transformation-enabling tools and methods such as Value Analysis, Systematic Innovation, Lean, User-Experience, Re-engineering, Continuous Improvement, Business Model Innovation and Digitisation.

Multiple case studies are used to illustrate the use of these methods including businesses such as Nokia, IBM, Blackberry, Apple, Allianz, British Airways, Amazon, Nintendo, AXA and Ryanair. The book also provides proven frameworks and effective approaches to enable a programme of business transformation.

For more information on the book, to read sample pages or order copies, go to Amazon.

 

Presenting Service Innovation at University of Exeter MBA

February 15th, 2017

Exeter University logo

Alastair Ross, Director of Codexx, presented the ‘Service Innovation’ module at the University of Exeter MBA programme on Friday 10th February 2017.

Alastair said “It is always great to share experience with experienced students, get useful feedback and better understand the innovation challenges they face in their businesses and sectors.”Alastair also lectures on Service Innovation at the University of Southampton MSc in Strategy and Innovation.

Redesigning legal services – lessons learned 2005-16

January 6th, 2017

Law firm re-engineering

Law firms are facing increasing business challenges due to the impact of globalisation, clients wanting ‘more for less’, deregulation and of course the impact of Information Technology and the Internet.

These challenges have driven progressive law firms to seek to improve their competitiveness by redesigning their services and support processes to improve the value delivered to clients and also the efficiency with which services are delivered.

Our new whitepaper explores the redesign of legal services – the reasons firms take this step, the approach used, the challenges faced and the benefits realised – using our experience gained in redesigning 20 legal services and processes for major English law firms between 2005-16.

Read it here: redesigning-legal-services-codexx-whitepaper-january-2017

 

 

Product development – are you good enough?

November 23rd, 2016

innovation-sign-free-image-shield-223326_1920

The challenges of managing R&D

Product development is a critical function for product-based businesses. The ability to develop new products with features and functionality that are valued by customers and users, to bring them to market quickly, cost effectively and at acceptable quality and then to support and enhance them during their lifetime has always been a complex undertaking.

Today’s additional requirements to serve a global market, to exploit new technologies to meet ever higher customer expectations, to consider the opportunities for complementary digital services and to compete against new low cost, but increasingly high value, rivals from China and other emerging economies simply add to the challenge.

To achieve business goals for profit and growth from new and existing products, there are major responsibilities placed on the Research & Development (R&D) function and its management team. The R&D function has two fundamental goals:

  • To develop, bring to market and support new value propositions
  • To do this in an effective and efficient way

In delivering new value propositions to the market, R&D management needs to be able to link research and technology possibilities with customer needs. It needs to have deep insight into the wants and needs of the users of its products and technologies. It needs to understand the unmet needs of users who are not yet its customers and where future growth can come from. It needs to be able to innovate to formulate technologies and product concepts that best meet these unmet needs, select the most promising and bring them to market.

 Effective and Efficient R&D

Being effective is a key requirement for R&D – to focus on the ‘right’ technologies, to select the ‘right’ product concepts and to get the ‘right’ balance between investment in new products with support and enhancements to existing products. But in addition, R&D efficiency is a key requirement. In developing new products there are critical resources which have to be efficiently used if the business is to realise the promise of its R&D potential:

  • Time – particularly time to market
  • People – particularly key research and development skills
  • Intellectual Property (IP) – how to exploit and protect it
  • Knowledge of the requirements of Customers and Users
  • Relationships with suppliers of technologies, components and services
  • Competitive analysis – of existing, as well as emerging and potential, rivals
  • The capabilities of internal functions – such as Marketing, Sales and Manufacturing – that provide the key resources across the value chain

Measuring R&D performance

To consider how well an R&D function is meeting these goals, there are some key outcomes that can be reviewed:

Is R&D creating value propositions that the market wants? 

A key measure here is the % of revenue from products launched in the last three years. If the % of revenue contributed by new products is low, then this indicates that the new product portfolio is not meeting user requirements in ways that are superior to the firm’s existing products – or rival products. This metric can be complemented by surveys among existing customers and also non-customers. In-depth understanding of user requirements (including unmet needs) and application knowledge are critical here. In meeting user needs, there is a balance to be struck between developing a new product and enhancing an existing one – or by providing a service-based solution. Increasingly digital services are playing a key role in meeting customer requirements. R&D operations now need to consider how to create ‘platforms’ that bring together hardware, software and service elements to meet user requirements in effective and reconfigurable ways that enable fast time to market.

Does R&D bring new products to market quickly? 

Key measures here are: How does the firm’s time to market compare to rivals? Has time to market reduced over the past 5 years? A fast time to market enables a company to met emerging customer needs before rivals – and thus achieve a higher profitability whilst there is less competition. A focus on getting a ‘core product’ to market fast – and then follow with enhancements is an effective approach. Lessons can be learned here from the ‘Lean Startup’ movement regarding the use of the ‘Minimum Viable Product’ (MVP) approach. With the increased in servitization, user needs may be met by a software/digital service solution that is ‘wrapped around’ an existing product platform. Service-based solutions can be brought to market much faster than product-based ones. R&D Management need to decide how this service element is provided – internally or through partners.

Is R&D on-time to market? 

Predictability is important – to fit with customer needs but also to align with the plans of internal support functions such as Manufacturing and Sales. Is R&D meeting defined project timescales? Failure to do so results in internal costs to replan and realign internal resources – with likely impacts on other products – and also can result in customer opportunities being missed.

 Is R&D delivering quality products?

How well are new products meetings their target performance? What is the level of their reliability, measured by field failures and returns? Trading quality for a fast time to market is a short-term solution. New technologies will have inherent risks which need to be identified and addressed – through rigorous trial and testing – prior to their use in new products.

Are products being developed by R&D within budget?

This is key to R&D delivering across its portfolio of planned and existing products. If new products overrun their development budget, the shortfall is typically met by reducing the planned budgets on other products or projects. R&D management need to consider how to get the best ‘bang for the buck’ from their budget – which requires a strategic view of their product portfolio and key decisions to be made on ‘make v buy’ policy, in-house development v external, new product v enhanced existing product and product v service solution.

Assessing your R&D operation

An effective way to ensure that your R&D operation is ‘fit for purpose’ is to assess it against best practices and also to determine how well defined practices are deployed in daily work (e.g. is FMEA applied effectively, is application expertise embedded in concept development,  are design reviews regularly held?).

An outside view can be powerful in such assessments – bringing an independent eye and experience from other businesses and sectors. Codexx has performed a number of assessments of R&D operations in Western and Eastern Europe, China and the USA, making use of our licensed PROBE benchmarking solution for R&D and our F4i (‘Foundations for innovation’) assessment for innovation practices.

We also worked with the Universities of Exeter and Aalborg between 2010-13 to study the ‘journey’ of new products from concept to market, covering 43 UK and Danish technology-based businesses, using a best practice model of the innovation journey. We have subsequently used this model to help companies assess their product development practices and performance.

 

The core of this article is an excerpt from the forthcoming book ‘Sowing the seeds of business transformation’ by Alastair Ross, to be published in 2017.

 

Legal tech frenzy – lessons from industry

November 18th, 2016

http://www.dreamstime.com/royalty-free-stock-images-man-working-modern-technology-image22891879The legal geek moves centre stage
There has been an explosion of interest in information technology in the legal sector of late – particularly technology at the leading edge such as Artificial Intelligence (AI). This interest was crystallised in the recent and well publicised ‘Legal Geek’ conference in London when a number of major law firms mingled with ‘LawTech’ companies and startups to discuss how new information technologies and new thinking could be used to transform ways of providing legal services. As well as AI and technologies such as blockchain the conference looked at ‘softer’ elements such as innovation and cultural change.

New thinking

This is a significant development in a business sector that has long been conservative and behind other sectors in its application of new business thinking and technology. It comes as many firms law struggle to maintain their levels of profitability in market conditions that have been challenging since the 2008 financial crash. The combination of price-focused clients, globalisation, the internet (and market deregulation in the UK) has driven law firms to seek to innovate in the services they provide and the ways they work.

Law firms typically have applied IT for legal research, case and document management and for the management of support activities such as time recording, billing and finance. This new wave of IT brings internet-based technologies and – what typically makes the press – Artificial Intelligence (AI) systems. The application of these new technologies promises to revolutionalise the way law is provided – for the benefit of law firms who can work more efficiently and effectively – and for the benefit of clients who will receive ‘more for less’. The implementation of these technologies will – over time – help in digitizing key elements of legal services – making law more affordable and accessible to the large unmet market of small businesses and individuals.

Deja vu? Lessons from industry

Having worked for the last decade in helping major UK law firms transform their services through re-engineering and innovation – and also one who has consulted to multiple business sectors for twenty-five years – I am feeling a sense of deja vu.

In the 1990s, the industrial sector was in the midst of an ERP frenzy – implementing new Enterprise Resource Planning systems such as SAP and Oracle to transform the efficiency of their business operations. In the late 1990s and into the 2000s, the next wave of technology looked outwards into SCM (Supply Chain Management) and CRM (Customer Relationship Management) – to better link business with their suppliers and customers. In both these ‘tech frenzies’, many companies suffered from implementation programmes that significantly overran their budget and plan and failed to achieve their business goals.

The root cause of many of these problems was the lack of an holistic and integrated approach to implementing these technologies as business transformation programmes, not simply as technology projects. The lessons learned were that there were key success factors for IT exploitation, particularly:

1. A vision & strategy are required for effective communication within the business, getting buy-in from key stakeholders and coordinating the resources and activities.

2. To get the best out of the IT, business processes need to be re-engineered first (to avoid the all-too-common ‘pig in lipstick’ outcome).

3. Effective programme management is required for effective coordination of IT, process and people work-streams.

4. Change management is fundamental to effectively deploying the new technology and working methods into daily business.

Are law firms grasping for a silver bullet?

New technology can often be an attractive ‘silver bullet’ for management teams faced with major business challenges. It appears as a nice ‘clean’ solution to a firm’s problems – as compared to complex messy process and organisational-based improvements. For this reason many businesses have wasted money and sub-optimised the impact of their technology investments by not ‘preparing the ground first’ with re-engineering and restructuring work.

We should also be clear that those law firms currently looking to apply new IT such as AI systems, are typically larger firms – the ‘Top 50’ in the UK – not the other 10,433 firms*. These are the wealthier and more sophisticated firms.

However in my re-engineering work with these larger firms in the last decade, it is clear that their services and processes have much opportunity for improvement. Re-engineering projects have typically yielded 25-50% cost reduction – whilst improving service quality – without the application of any new technology.

These services simply were not designed or operated in a systematic and efficient way. Automating them without re-engineering them first would significantly reduce the benefits from IT investment. Indeed for smaller firms lacking the capital or the resources for major IT investment, internal re-engineering work would be a better approach  for now – then later exploit the use of these new technologies when prices have reduced and functionality improved.

Structured evaluation and execution

So law firms should look outside their sector and seek to learn from others’ experience on how best to truly transform their businesses by exploiting new technologies and thinking. They should strategically evaluate – and incubate – these new technologies to determine how they can be used to re-fashion their value proposition and their business model. They should prepare the way by first systemising their services and processes. And they should manage the implementation of these new technologies as an holistic programme.

 

For more information on law firm innovation, see ‘Innovating professional services – transforming value and efficiency’ by Alastair Ross, published in May 2015 by Gower.

* There are 10,483 law firms registered in England and Wales in September 2016 according to the Solicitors Regulation Authority.

Why professionals should embrace Lean thinking

October 26th, 2016

galley

Delighted clients. High utilisation. Business development.

These are the three key mantras guiding the life of any fee-earning professional – be they a lawyer, an accountant, a management consultant or a specialist in any knowledge-based business. And we shouldn’t forget a 4th mantra in any profession: building your own expertise, aka ‘professional development’ – that is if the professional has any time or energy left after serving the needs of the first three…

With the increasing demands and competitive pressures on professional service firms, the life of a fee-earning professional can often seem akin to a galley slave working in the bilges of the business, rowing frantically to serve the demands of their clients with their Partner cracking the whip on chargeable time….

Just to make this picture even worse is the fact that a good amount of the workload and stress on our poor professional is simply unnecessary. It doesn’t move the business any faster through the competitive waters. Indeed the professional could slow their rowing – or even stop at times – and there would be no difference to the speed of the vessel.

 

Professional services – a story of waste

Much work performed by professionals today is simply waste.

It doesn’t deliver value for clients.

It doesn’t deliver profit to the business.

it doesn’t enhance the professional’s expertise.

How can this be? Professional service firms are smart aren’t they? Law firms, Accountants and Management Consultants charge clients substantial fees for providing expertise and advice that helps improve clients’ businesses. So how could they do this if so much of their employees’ work was waste?

The sobering fact is that they are able to deliver so much value to their clients despite their internal inefficiencies. In my work with professional service firms over the last fifteen years, I’ve seen professionals exhibiting similar types of inefficiency in their work:

  • Doing work that is not required to meet client needs
  • Finding and reworking errors made by others
  • Doing work that could be performed by junior personnel
  • Doing work that could be done by support staff
  • Taking excess time to perform work
  • Not applying better methods used by others

These are all simply approaches to work that waste professional expertise and time. When firms are able to charge clients for all work that is performed for a job or by the hour, this inefficiency can be converted to income (and is thus a ‘good thing’). But these times are changing with clients increasingly demanding fixed fee pricing for work. This inefficiency then becomes a cost to the business.

As an example, in my work with major UK law firms since 2005, I have helped firms re-engineer 20 services. By applying Lean approaches to identify and remove waste from work and redesign the service to better meet client requirements, typically between 25-50% (and once as much as 75%) of the cost of the service was removed. And this cost reduction was not at the expense of quality – indeed in all cases the quality and consistency of the service was actually enhanced.

As these improvements used a highly collaborative approach, working with a team of fee earners and support staff, I was able to experience first hand the change in the professionals’ view of the service re-design project. The mental journey they took went something like this:

Stage 1: Politely Hostile: “Why am I in this team? I haven’t got time for this.”

Stage 2: In Denial: “I don’t see how we can be more efficient. Our work is professional – it can’t be simplified or systemized.”

Stage 3: An Awakening: “Mapping the service showed a lot of inconsistency and inefficiencies – I guess that is waste?”

Stage 4: Energized: “If we could remove the waste, we could do our work more easily and take less time.”

Stage 5: I’m a Believer: “Our work is less stressful, we are more productive and the service is more profitable. Where else can we apply this approach?”

I can think of one project where we were re-designing one fixed-fee legal service that was not profitable for the firm. An experienced associate on the project team was very much at ‘Stage 1″, considering the project a waste of her time. But she began to change in Stage 3 after I introduced Lean thinking and the team mapped the service to lay bare the considerable inefficiencies. She was the one who in Stage 4 spent her own personal time drawing up a map of a new way of performing the work – which became the core of the ‘TO-BE’ service – resulting in a new service that was more consistent, faster and reduced the direct cost of performing the work by 75%. She is now very much a Stage 5 advocate in the firm…

 

Lean can set the professional free

Professionals often consider Lean approaches as a threat. They see it as an attempted commoditization of their work, through standardization and de-skilling, and so they resist it. But actually Lean can enrich a professional’s work by removing frustrations, taking away repetitive and lower skill tasks and so freeing up the professional’s time for more challenging and higher-value work. This increases their personal fulfilment from their work. The application of Lean also allows junior and less skilled personnel to improve their effectiveness – making use of codified methods to perform lower value work that was previously performed by experienced professionals. In doing so the organisation’s effectiveness and efficiency is improved – making it more competitive. So Lean is actually a productivity tool for professionals and should be embraced – not resisted.

 

 

This article was originally published by Alastair Ross on LinkedIn on 24th October 2016.

Law firm merger – making 1 + 1 > 2

October 13th, 2016

Merger Dictionary Definition Word Combine Companies Businesses

 

Merger – the theory

Merger is an increasingly popular option for law firms seeking a transformational solution to the increasing challenges in the legal market. A merger will create a firm with increased services scope, geographic coverage and depth of resources. It will be attractive to major international clients seeking a legal partner capable of covering their requirements in the key commercial, real estate, employment and litigation areas. Merger will allow the new firm to benefit from economies of scale in negotiation with suppliers and in its support services. The merger will provide the magic of ‘synergies’ that will enable the sum to be truly greater than its parts (i.e. 1+1 is much greater than 2…)

 

Merger – the reality

Cut the sunshine and the smell of roses and cue fog and the sound of shouting and clashing swords. Back to the reality of merger. Because it’s tough to do well. Especially in a knowledge-intensive people-based business – like a law firm.

Getting the most out of a merger demands a bold vision for the new firm, a structured approach to achieve it and a clear picture of capabilities in each of the merging firms. There are very few cases of effective post-merger integration and optimisation in law firms. Many firms seem content to settle just for the larger scale that merger provides. Why is this?

An obvious reason is that making the most of a merger requires significant change and that is challenging in most law firms. The partnership model is very effective at resisting centrally-driven ‘mandated’ changes. Firms also do not typically operate or like ‘process thinking’ and typically resist standardisation of working. I’m using a thick brush to paint a crude picture here – but it is a recognisable one for most law firms – and it makes effective mergers a challenge. On top of this basic challenge is the fact that firms don’t typically have a vision or a programme for ‘post-merger optimisation’.

 

Post-merger optimisation needs process-thinking

The focus of most firms on merging is to adequately integrate the two organisations, working methods and IT and establish a new management structure. Indeed this is the necessary ‘phase one’ in getting a working business. But to make the most of the merger, a ‘phase two’ is required. This phase will optimise the joint capabilities of the merged firms to realise the potential synergies from the merger – to yield higher value to clients and improved efficiency for the firm. This requires a clear vision, process thinking and a structured approach, for example:

Before the first step: What’s the vision?

A challenging vision for the new firm that provides an improved level of competitiveness based on exploiting the potential synergies in the merged firms should be the starting point.

Step 1: Let’s see what we’ve got

A key first step is to objectively assess the services and processes in the merged firm to identify best practices and performance (i.e. where is the ‘one best way’ in each service/process element).

Step 2: Commonalisation and Rationalisation

The next step is to establish common processes and services, based on existing best practices (i.e. the ‘one best way’) that are standardised across the firm. This work can be part funded by the savings from realising the economies of scale in support and in the purchasing of products and services.

Step 3: Optimisation

For further optimisation the firm should consider the application of formal services management to establish a more systematic approach to delivery and innovation of services. Major automation of key common internal processes – using integrated enterprise software such as SAP – is now worth contemplating now that there are defined and optimised processes in place. Unfortunately too many firms seek to automate existing processes (without first improving them) and face the ‘pig in lipstick’ outcome…

 

Systems thinking is needed

The appetite of major law firms over the last few years to merge and create major – often global – law firms has created major national and international operations, some with yearly turnover well in excess of £1 billion. These mergers provide clients with increased support and a range and depth of legal capabilities – and thus increase the firms’ potential competitive position.

However such mergers also further challenge the existing operational methods within these firms for effective and efficient service delivery and the optimisation of support processes. Law firms typically lack the systematic approaches of services and process management and innovation. This is a weakness that will need to be addressed if these firms are to operate profitably in a services market that is increasingly global and digitally-enabled.

What does Brexit mean for UK business innovation?

July 12th, 2016

London in fog picture

Alastair Ross, Director, Codexx Associates Ltd
Professor Jeremy Howells, Kellogg College, University of Oxford

 

Peering through thick clouds

The initial impact of the Brexit referendum result has been the start of a period of volatility in the UK exchange rate, stock market and political governance. It has also created uncertainty for business as the eventual relationship with the EU and the nature of access to the single market is not known and will not be known for several years. Business does not like uncertainty for it makes it hard to predict future conditions and thus difficult to plan with any certainty.

What does this mean for a UK-based business in the medium to longer term and specifically where and how it should refocus its innovation efforts? The short answer is no-one knows for certain. The more useful answer is it depends on a number of factors, specifically on how they develop over time and the conditions which they eventually stabilise at. Considering a number of potential scenarios based around the development of these key factors is a useful way to consider and develop business plans.

So what are those factors and how should an organisation’s innovation agenda be modified based on their development? In this short paper we are considering innovation at the individual business level and in its broadest sense – the improvement in customer value and internal efficiency resulting from the systematic capture, development and implementation of new ideas. The results could be new or modified products and services, new ways of working, new market positioning or indeed a new business model.

 

 Uncertain conditions favour agility

The current situation takes us back to the situation of late 2008 and early 2009 after the financial crash. Codexx worked with a large progressive engineering company which had been hit hard by the resulting recession and recognised the need to fundamentally change their cost structure to better align to market conditions. Thus the company sought to exchange fixed costs for variable costs, in their workforce and through the use of suppliers. Essentially they were seeking to improve their agility – their ability to respond quickly to a market or customers – to grow capacity in required areas when there was an increase in demand and to be able to trim it easily – and without touching their core employees or facilities – when demand dropped off.

The Brexit situation has some similarities in that both situations resulted in uncertainty. However the impact of Brexit will be particularly felt by UK-based companies due to the major changes that lie ahead in key areas such as:

  • The UK pound exchange rate
  • UK stock market level
  • The nature and degree of access to the single EU market
  • People movement between the UK and EU

Since these are the key drivers to the future form and nature of the UK business model and competitiveness – and their end points will not be known for between 2-5 years, what can businesses do now? Businesses need to establish the capability to respond quickly to whatever economic and market scenarios eventually become reality – and in the meantime continue to operate effectively.

 

A new innovation agenda

Innovation is effectively about building tomorrow’s business – through the development of new products and services, new ways of working and new business models. An organisation has a constant challenge in focusing time, energy and resources on innovation – as the daily business needs this attention now and management priorities and rewards favour this. With Brexit, management has to dedicate increased focus on innovation as it is highly unlikely that the business environment for UK firms in 5 years’ time will be the same as today.

In many ways Brexit is an opportunity for businesses – as it provides a clear ‘burning platform’ for change and innovation. ‘The world is changing’ – well at least the market and supply-side conditions certainly will – and this provides a clear spur for innovation. So what sort of items need to be considered for the innovation agenda for UK-based businesses?

  • In the short term, trim waste to free up resources and reduce costs to offset increases in costs of imported parts and services due to the fall in the UK pound. This calls for a refocus on Lean thinking and process innovation. In the medium term, there may be opportunities for switching to UK suppliers.
  • Seize short term market opportunities in the single market that currently prevail with a cheaper pound making exports cheaper. This calls for a specific focus over the next 2+ years whilst the current single market access remains. There is a strong relationship between innovativeness and export performance and growth so there are opportunities here in the longer term for businesses that are seeking to sell innovative products and services.
  • Improve the codification of expert knowledge so that services and processes can be effectively delivered with less-skilled personnel. This is to recognise, in the short to medium term, that some of the skilled personnel available from EU countries outside the UK may not be available after the UK formally exits the EU. In the longer term, with, for example, an Australian based points immigration system, it may call for wider global search and recruitment practices. Even if the skills loss scenario is not realised, such codification will improve business efficiency and better leverage higher skilled personnel for higher value work.
  • Investigate the potential for new international markets that you have no presence in, looking at how you can reduce your costs and risks of entry by using partnership. This is in preparation for taking opportunities with the UK having the ability to negotiate new international trade deals but also potentially to offset any reduced access to the EU single market.
  • Prepare for a potential  restricted single market where the UK is faced with tariff barriers and thus products and services will be more expensive to EU buyers. This means an increased focus on value – developing new innovative offerings which can command a higher price – and preparing for increased price pressure by reducing non value-adding costs. In certain instances, certain products and materials, such as food products, may become cheaper in the medium term outside the EU. In the longer term accepting trading terms to, the European Economic Area (EEA), would mean continued access and compliance to EU trade rules. Outside the EEA, would mean trading on WTO general tariff rules and what access could be gained to individual countries or trading blocs, such as the Trans Pacific Partnership.
  • Don’t lose sight of the home market, where post EU exit there will likely be price advantages for UK-based businesses and also a likely period of goodwill to ‘home’ producers with a focus on ‘Buy British’, particularly if there is restricted access to the EU single market.
  • Review your requirements and sources of research funding. In the medium term if the UK remains in the wider EEA it can access current EU Horizon 2020 funds and other research and innovation funding. However, this will depend on the UK agreeing to continue to allow free immigration access to EU passport holders.  If this is not accepted by the UK government, then much will depend on how the UK shapes its own UK innovation policy and at what funding levels. Alternative sources of research funding may well be needed.

A silver lining?

Overall the next few years will be turbulent and challenging for UK-based businesses. However, there may well be a silver lining in this cloud – where the tough conditions drive businesses to increase their focus and level of innovation – to effectively improve their competitive health and thus better prepare them for market success – whatever challenges the future business environment will hold.

Director’s blog: Can you really train people to be innovators?

May 25th, 2016

the director's blog on innovation - logo with text

More innovation please

Raising the level of innovation is becoming a critical need for businesses as they face increasing competitive pressures. A fundamental requirement for making businesses more innovative – in what they provide to their customers and how they do so – is to get their managers and employees engaged and able to effectively participate in innovation activities. This requires an internal system for innovation that establishes key elements of enabling innovation infrastructure such as strategy, processes, tools and supporting resources. And part of this work involves training managers and employees in innovation.

But can you really train people to be innovators?

I ask this question, as there is a view – and not an uncommon one – that innovators are born not made: “Just look at Steve Jobs, James Dyson or Jeff Bezos – they weren’t trained to make them the innovators they are!” Implicit in this view is the belief that when it comes to innovation ‘you’ve either got it or you haven’t’. If that’s the case then what hope is there for businesses trying to innovate if they don’t happen to have a Jobs, Dyson, Bezos or the like in their midst….?

Innovation is not just creativity

Let’s step back and review a few innovation basics: Firstly, people often mix up innovation and creativity. Creativity is about generating ideas. Innovation is about creating value from ideas. Ideas on their own have no value – only potential value which has to be realised. Certainly some people are naturally more creative than others and thus more likely to generate potentially valuable ideas. But being creative alone is not enough – we also need the skills to realise the ideas and transform them into value. That requires skills in idea exploration and analysis, development of new offerings and methods, project management, marketing and selling (internally and externally) for example. And ideas can be effectively generated by (less creative) people working systematically anyway (through effective brainstorming and other ideation methods). So innovation requires a mix of capabilities, not just creativity.

Not only a lone genius required

When talking about improving innovation in an organisation it’s important to remember that the goal should be to ‘institutionalise’ innovation – to enable regular and sustained innovation through widespread and integrated efforts – rather than the occasional spark of innovation enabled by a few individuals (who can have off days or can leave). People forget that Apple’s innovation success with its iPod, iPhone and iPad was the result of multiple innovations by many individuals with Steve Jobs being the orchestrator and very much the public face, but by no means the sole innovator – and indeed his orchestration was ineffective and inefficient at times (read the excellent biography ‘Steve Jobs’ by Walter Isaacson for details).

One of the earliest examples of effective institutional innovation was the Menlo Park laboratories established by Thomas Edison in 1876. This was one of the first large-scale research establishments and formed the template for R&D organisations for the next fifty years. Edison brought together more than 200 talented scientists, engineers and craftsman and overlaid a system of innovation that harnessed their skills in a structured and productive way with defined teams, extensive experimentation and record keeping. It was a highly productive operation and created more than 400 patents. Whilst Edison was very much the public face of innovation, it was very much an institutional rather than individual approach to innovation, with defined targets such as ‘a minor innovation every 10 days and a big thing every six months or so’.

Most innovation is doing existing things better

A more modern example in a services firm is that of AXA Insurance in Ireland which started up an innovation programme in 2000. Theirs was very much an experimental approach, learning as they went along. They found that they could generate lots of new ideas from their employees but they needed to apply a process to effectively screen and select the best ideas. One key insight was when they analysed the ideas implemented in their first few years of the programme they found that 80% of them were concerned with removing waste or improving existing services or ways of working. Only 10% were ideas for new innovative services. This finding helped demystify innovation in the business – employees realised that most innovation was in doing existing things better – incremental innovation – which they could certainly do in their daily work. That is a powerful message for all businesses: Don’t just look for the ‘silver bullets’ of radical innovation, spend most of your time removing the ‘rust and grime’ from your existing methods and processes and then ‘polish them’ to make them more effective. Industrial experience of Continuous Improvement, making use of basic techniques for measurement, analysis and waste elimination – often within a Lean programme – has shown the power of such ‘do better’ innovation. Training employees in these core techniques can make them more structured and effective in their work on process innovation.

So you can train people to become innovators?

You can indeed train people to be effective in ‘do better’ or incremental innovation – which accounts for the vast majority of innovation. But what about ‘do different’ radical innovation? This type of innovation is needed if a firm wants to leap ahead of rivals. And firms would certainly want a few silver bullets as part of their innovation armoury…

To help answer this question I’m going to use the example of the UK legal sector. Most observers would not consider law to be a natural environment for innovation and rather unkindly might jest that ‘lawyer’ and ‘innovative’ are two words never found in the same sentence… That might well have been true(ish) twenty years ago, but it’s a viewpoint that is increasingly out of date today. For the UK legal sector has been in a state of major change for the last decade, driven by a combination of deregulation, tougher market conditions driven by the economic fallout from the 2008 financial crash, and the increasing impact of the internet. The result is clients ‘wanting more for less’, new rivals, internet-enabled entrants and law firms recognising the need for major changes in both their offerings and their working methods. Many have embraced innovation in their services – often with a primary goal of efficiency and cost improvement.

Through Codexx I have worked with a good number of major UK law firms helping them to respond to these major challenges by applying innovation. This has taken the form of two different types of interventions:

  • Specific service innovation (aka ‘re-engineering’)
  • Improving a firm’s innovation capabilities

Service innovation – a focused environment for innovation

In my work with law firms since 2006 I have helped law firms re-engineer a total of 20 legal services using a Codexx approach called ‘Smarter Working’. This approach uses a small core team of fee earners and support staff to perform the re-engineering with the support of the Codexx consultant. We effectively establish a ‘micro innovation environment’ using collaborative workshops and with training in team-working, some basic Lean principles and creative idea generation methods. This has resulted in major redesign of services such as Commercial Due Diligence, Inquest and Clinical Negligence, to reduce costs by as much as 75% whilst improving service quality. It has also resulted in the development of new internet-enabled services. Looking back at this work over the last decade I can unequivocally say that you can train lawyers – or indeed any other employees – to be very effective innovators within a supportive environment for innovation.

Improving innovation capabilities

Other law firms have wanted to take a broader approach, not just focused on selected services, but to make their firms ‘more innovative’. Their goal was a firm that used sustained innovation to improve its services, its efficiency and thus its competitive differentiation and its attraction as a place to work for progressive lawyers. To help them do this I have applied Codexx methods and tools to help them establish a systematic approach to innovation and use this to drive innovation of new and improved services and working methods. This work included strategy development, an innovation process & support structure, change management and of course training for selected personnel.

From my experience a key strategic approach to establishing innovation on a firm-wide basis is to run two parallel missions: the first to build the required innovation system and the second to deliver innovation outcomes (e.g. improvements, enhanced services etc.). The first mission is key to long term innovation success; the second is key to delivering benefits early and to help gain buy-in through demonstrable early success. I have delivered training on innovation to selected personnel in a number of firms (often innovation ‘champions’ whose role is to spearhead innovation activities) and typically found lawyers receptive and able to effectively apply the new methods – generating both incremental and more radical ideas. Based on this, there is no doubt in my mind that these lawyers and support personnel can be very effective in catalysing and supporting innovation within their firm.

That is of course if they are given the ‘space’ for innovation.

The one proviso – space for innovation

So you can indeed train people to be capable of innovation. But they can only subsequently realise that capability and successfully innovate if the organisation allows them space to do so. ‘Space for innovation’ covers a number of key attributes:

  • Leadership supportive of innovation – not just focusing on today’s business
  • Time available for work on innovation – always a challenge for people busy running the daily business
  • A wide, but defined, frame to seek innovation in – innovation in a vacuum is rarely effective…
  • A supportive culture for innovation – valuing effort and recognising some failures as inevitable
  • Resources to support innovation (such as other personnel, methods, tools and budget)

Unfortunately these are not always put in place or sustained to accompany training for innovation – and then all the teaching in the world on innovation will have as much effect as trying to light a fire on boggy ground….

Alastair Ross

Director
Codexx Associates Ltd

Further reading

To read further about Thomas Edison’s approach to innovation and the Menlo Park research organisation, see a delightful and informative book on innovation: ‘Innovation – a very short introduction’ by Mark Dodgson and David Gann, published by Oxford University Press.

For more information on the AXA Ireland case study and effective approaches to innovation in knowledge intensive service firms  see ‘Innovating professional services – transforming value and efficiency’ published by Gower. https://www.routledge.com/products/9781472427915

For a case study on law firm re-engineering see: https://www.codexx.com/2015/a-story-of-law-firm-re-engineering-people-processes-profit/

 

Energizing Change

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