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Mar 28, 2017

To become truly innovative, Canadians need to become better at thinking creatively

Attractive businesswoman in clean room with city view looking at whiteboard with colorful sketch. Creative and analytical thinking concept. 3D Rendering

Originally published on March 20, 2017 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/ottawa-can-help-but-to-become-truly-innovative-canada-needs-to-embrace-entrepreneurship/article34348521/

With the federal government getting set to unveil its new innovation strategy in its March 22 budget, a scholarly article on “Canada’s Low-Innovation Equilibrium” has asked whether anything short of a crisis can jump-start our efforts to produce the better, smarter products and services we need to keep our economy growing.

The author is Peter Nicholson, one of our brainier Canadians: a physicist, computer-science prof, banker, former Nova Scotia MLA and policy adviser to former Prime Minister Paul Martin. In a highly readable article in the journal Canadian Public Policy, he points out that the business community’s generally downstream, “branch-plant” status has enabled Canadians to maintain a prosperous standard of living despite neglecting the necessary business of developing new products and services. That would explain why a century of policy efforts to stimulate innovation have failed.

But we may not be able to coast much longer. Pointing to “transformative” new technologies such as IT, biotech and nanotech, as well as the need for more and benign energy solutions, he publicly asks how long our business and political leaders can keep neglecting innovation.

I do not question Dr. Nicholson’s analysis. But he is an intellectual, firmly tied into our academic-government-corporate elite, and I believe he’s missing something. Innovation isn’t just corporate R&D flowing out of tax policy. Innovation is an attitude. It’s a way of looking at all aspects of life around us – problems, constraints, delights and discoveries – and wondering how you can use them to create new and better ideas, processes, products and services.

For most of us, business or individual, the greatest innovations will not spring from laboratory experiments or quantum computing. They come from finding new ways to do things better.

Case in point: two of the best-selling products coming out of the ABC-TV show Shark Tank are as humble as you can imagine. Consider “Scrub Daddy,” a smiley-faced scrubbing tool that changes its texture with the temperature of the water you wash with. Inventor Aaron Krause has now built a company around his silly sponge with a portfolio of innovative household products, many sourced from an inventive public.

The other breakthrough: the Simply Fit Board exercise board, developed by a mother and daughter team. The simply curved balance board lets you strengthen your core while doing basic twists and squats. The plastic, neon-coloured boards cost $9 (U.S.) to produce and sell for $40 at Amazon and Wal-mart, a profit margin that enticed investors Kevin O’Leary and Lori Greiner into a bidding war.

I’m not saying that big science and corporate R&D aren’t important. But as the politicians and economists argue over policies and incentives, Ottawa must acknowledge that individual Canadians and entrepreneurs have a huge role to play in boosting innovation. Let’s find creative ways to turn Canadians into more active, curious, creative thinkers and tinkerers. (Look at how the CBC’s Dragons’ Den, the precursor to Shark Tank, has stimulated entrepreneurial creativity.)

And let’s also remember that to become expert innovators, Canadians must do more than come up with good ideas. They must actively bring them to market – which means learning more about business models, market research, production, finance, selling and marketing. These skills must be taught in schools and inculcated throughout society. The federal government is not responsible for education, but it has many levers it can pull – such as workforce development and corporate incentives to better understand market need and product potential, and sponsorship of national pitch contests – to expose more Canadians to the fun and profit of entrepreneurship and creativity.

Bottom line: Innovation is about asking questions, defying social norms, creative thinking, understanding other people’s needs, brainstorming new business models, and learning to be flexible and resourceful when market testing shreds your dreams. These are all apolitical but essential life skills that we will need to prosper in an increasingly competitive world. Innovation is not just for ivory towers, but for kitchen tables, spare bedrooms and garages across the country.

Ken Tencer is chief executive officer of design-driven strategy firm Spyder Works Inc. and the co-author of two books on innovation, including the bestseller Cause a Disturbance. He holds the Institute of Corporate Directors certification (ICD.D). Follow him on Twitter at @90per centRule.

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Mar 21, 2017

How a hackathon can encourage your employees to innovate

Group Of Multi-Ethnic People Working On Digital Devices Around Table

Originally published on March 16, 2017 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/hackathons-arent-just-for-hackers-any-more/article34146640/ 

Everyone in business has heard the expression that if you’re not disrupting your market, someone else will soon be disrupting you. But this raw challenge doesn’t help most leaders understand how they’re supposed to get started in the creative-destruction business.

But Steven Stein has figured it out. The chief executive officer of Toronto-based Multi-Health Systems Inc. has created an in-house “hackathon” to encourage innovative thinking and transform ideas into new products.

Stein is a true believer in creative destruction. He founded MHS 33 years ago to disrupt the psychological-testing industry by automating conventional paper-based tests for the personal computer. Today, MHS is a global industry leader, with 160 employees and clients in more than 75 countries. But Stein knows his company remains vulnerable to new entrepreneurs with better ideas – so he’s shaking up his team to ensure they develop those bold new products first.

It was an off-site strategy session for senior leaders that launched MHS’s innovation project. “Two years back, we had a presentation on disruption,” Stein said. “We went home and had nightmares about how new people could kick us out of the market.”

Stein and his team knew hackathons were popular, if sometimes messy, events that help small teams turn new ideas into working prototypes fast. Even when they don’t produce new products, hackathons can be powerful problem-solving exercises that can build positive attributes such as agility, risk tolerance and trust. So Stein appointed a team, led by president Hazel Wheldon, in the summer of 2015 to put MHS on the hackathon circuit – and make it fun and engaging.

Since then, MHS has held two hackathons at its Toronto headquarters, and created a five-person “innovation hub” to select the best ideas and turn them into customer-ready products. Innovation is a long game, and the first market tests are still in the field. But Stein believes the process has already been successful. “The biggest benefit is the excitement it created,” he said. “People loved working with new people. It’s been worth it just for the engagement, not just the products we got out of it.”

Could your company pull off a similar innovation coup? Here’s how MHS did it.

  • After researching how other companies managed innovation events, MHS’s hackathon planners developed guidelines and rules. They decided on a one-day hackathon on a January Monday – with the 15 teams competing in a “Demo Day” the following Friday, in conjunction with MHS’s annual awards dinner.
  • Teams formed in groups of five to eight in early fall, so they would have lots of time to develop ideas and research solutions prior to the big day. To help the teams focus, planners identified four sectors as most likely to be disrupted: big data; mobile apps; gamification; and process improvement.
  • As the employee teams took shape (each one restricted to one programmer and one employee from user experience), the planners scheduled a series of “lunch and learns” through the fall. Topics included creating prototypes, writing business plans and making killer presentations.
  • The incentives? The team with the most promising idea (as judged by Stein and a panel of internal and external judges) would win $5,000. There would also be a $2,000 second prize, and a third prize of $1,000.

On hackathon day in January, 2016, the 15 teams had until 6 p.m. to finalize a prototype and hammer out a business plan. MHS supplied food and colour-coded team T-shirts, creating a festive atmosphere. Participants were laughing, sweating, debating and tweeting – so much so that competitors started noticing. For 2017, MHS had to say no to tweets that gave too much away.

All teams presented to the judging panel on the following Friday. Each team was allowed a five-minute presentation, followed by five minutes for answering questions. Stein was thrilled by the winning ideas: an inexpensive “candidate competencies” test for employers to help MHS hack its way into a highly lucrative market; a mobile “early warning” solution that let psychologists share with patients (or their parents) preliminary test results in minutes instead of weeks; and the identification of new markets for some of the firm’s underused mental-health surveys through sales to the insurance industry.

Stein said some of these ideas might have daunted the team prior to the hackathon. “But now these guys have mapped them out. They said: ‘We can do it. Here’s how.’ ”

The next step was for the implementation team to review the finalists’ ideas and adopt the most promising projects. For now, MHS is funding this project through unbudgeted foreign-exchange gains; Stein hopes the group will start paying its way before the Canadian dollar turns up again.

The innovation hub – two psychologists, two programmers and a UX person – fine-tuned initial prototypes for hand-off to sales, which arranged pilot programs with real customers. The team set itself quarterly goals to ensure it was doing its job; in innovation, knowing what to stop working on is just as important as spotting winners.

“Over all, there are eight or nine projects we’re moving ahead with,” Stein said. With two hackathons now under his belt, a pipeline of new projects and a re-engaged work force, he said the whole process has been a winner. “It’s turned us from a disruptee to a disruptor.”

Ken Tencer is chief executive officer of design-driven strategy firm Spyder Works Inc. and the co-author of two books on innovation, including the bestseller Cause a Disturbance. He holds the Institute of Corporate Directors certification (ICD.D). Follow him on Twitter at @90percentRule.

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Jan 18, 2017

Companies built on customer needs are all too rare

factory machine producing customized item based on customers' needs preferences style and requests

Originally published on December 22, 2016 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/companies-built-on-customer-needs-are-all-too-rare/article33213377/

After years of fussing over KPIs, management by objectives and zero-based budgeting, I am pleased to see more and more business owners coming to grips with one essential truth: without customers, there is no business.

It sounds so simple. But companies that are designed and built around the needs of customers are scarcer than tulips in December. Businesses are started for many reasons – to put bread on the table, scratch a creative itch, fill a perceived need – but rarely to serve a specific client base. Companies have to learn to put customers’ needs ahead of their own, and it’s a journey that will last a lifetime.

Some of the worst offenders are startups – particularly the high-growth tech startups that Canada is counting on to generate jobs and export revenues. Typically started by engineers and scientists trying to solve specific problems, these companies tend to be product-oriented. When they encounter a setback developing a new widget, they are more likely to tackle the problem with new approaches or technology than by talking with customers to ensure they’re still on the right track. Result: many startups go through a series of jarring, risky “pivots” rather than continuous, informed iteration.

But there are signs of hope in the Canadian startup scene. More companies are joining incubators and accelerators to learn entrepreneurship from mentors, advisers and fellow entrepreneurs. And increasingly these groups are pushing the idea that success doesn’t come from the lab, but from meetings with customers.

In Ottawa, Carleton University’s Lead to Win program is one of North America’s Top 10 university business incubators, according to Swedish research and benchmarking firm UBI Global. Lead to Win was founded in 2002, following the bursting of the tech bubble, to help Ottawa-area technologists become business founders. That meant immersing them in the entire business community: professional advisers, seasoned coaches, service-providers, other entrepreneurs, suppliers, investors, and, yes, potential customers.

“The research is clear: high-achieving technology entrepreneurs operate in a business ecosystem that includes many different stakeholders, including partners, critical suppliers, and market channels,” says Dr. Steven Muegge, an associate professor at Carleton University, and one of the organizers of Lead To Win. Companies applying to Lead to Win go through a rigorous opportunity review process to ensure they’re ready to benefit from the Lead To Win ecosystem in ways that create value for themselves and for their partners, Muegge says: “If the founders are only thinking about the product, they’re probably not ready.”

Although Lead to Win stresses an “ecosystem” approach, its key success metric is sales: companies that earn entry to Lead To Win must demonstrate potential to generate $1-million in annual revenues within three years. “A good product is not enough,” Muegge says. “Revenues are the proof that what you’re doing is valued by customers.”

Program advisers and mentors help the entrepreneurs to identify prospects, build a pipeline, train salespeople, work on their pitch, and arrange customer meetings. Advisers may even sit in on early customer meetings. But what they’re best at, Muegge says, is demanding progress on all of a business’s sales activities. “We train and support, observe and provide feedback, and keep metrics, but the entrepreneurs are ultimately responsible for sales. They know that, on Monday morning, someone is going to ask how your sales call went. It creates accountability.”

In Waterloo, Ont., they’re setting high targets for customer development. Communitech, an industry-led technology association, has launched a six-month sales-acceleration program called “Rev.” Its goal: to give startups the vision and process to scale to $100-million in revenue.

With the aid of experienced product, marketing and sales executives, Rev helps client companies master all the intricacies of sales: segmenting and targeting markets, pricing, developing key messages, building buyer and user “personas,” perfecting their pitch, and building and training a focused sales force. Rev also tackles a challenge most startups overlook: finding large distribution partners to scale up sales quickly. “These are aspects of building the business that most of our founders have never confronted before,” says Communitech executive director David Chalmers. “At Rev, we build that structure out.”

Companies enter Rev with a product or service, and some sales. “Rev tries to work with the foundation they’ve created,” Chalmers says. “But sometimes, there is a reset. When you’re growing companies, what you did historically, might not be the same framework that is required to take the company to new heights.”

The biggest hurdle, he adds, doesn’t usually come from the market – but from the entrepreneurs themselves. “When CEOs come into this program, they have a good understanding of their business. Our goal in Rev is to work with them on the areas that require more due diligence and refinement, specifically those related to revenue attainment and growth. In other words, you need to see your business from the customers’ point of view, identify functional gaps, then build the necessary tools required for sustained growth.”

The good news is that once you accept that reality, your viewpoint shifts immediately. By the time Rev CEOs graduate from the program, Chalmers says, “Their go-to-market strategy becomes very transparent and their business confidence goes right through the roof.”

Open your eyes and ears to your customers. Success is waiting. Up there on the roof.

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