Center for Innovation Strategies
CIS Update: Inspiring a Growth Mindset

July 2020

Welcome to the July edition of our newsletter. If you have ideas for newsletter topics, virtual speakers, or ways in which you would like to collaborate virtually, please contact Jenny Heckscher, Heckscher.1@osu.edu. Please don’t hesitate to be in touch to let us know how we can support you and your organization.

The Increasing Importance of Open Innovation

Open Innovation imageOpen innovation has brought us many innovative consumer product solutions, such as P&G’s Swiffer Dusters and Mister Clean Magic Eraser, developed through their Connect+Develop open innovation program, which launched in 2003. Ideally, open innovation will lead to a vaccine to resolve the pandemic. The term open innovation was coined in 2003 by Henry Chesbrough, who defines it as “the antithesis of vertical integration where you do everything yourself inside your own four walls.  Instead it’s a collaborative process that involves bringing in external knowledge for your innovation activities and equally, allowing unused ideas in your organization to go outside for others to use in their innovation activities.” In a recent HBR podcast, Chesbrough notes that 78 percent of North American and European companies engage in open innovation, but there are problems stemming from a gap between development and widespread distribution. Innovation has increased rapidly in the tech sector, for example, yet productivity and income levels have stagnated in a phenomenon Chesbrough calls the exponential paradox. To counteract this, Chesbrough recommends private and public sector solutions; for example, private companies need to invest in hiring and training employees, while the public sector needs to invest in infrastructure that enables wider dissemination of innovative technologies (such as widespread access to 5G internet).

In “Why Now is the Time for Open Innovation,” innovation scholars Linus Dahlander and Martin Wallin note how recent examples of collaboration in response to the pandemic remind us of open innovation’s great potential to expand value creation “through new partners with complementary skills or by unlocking the hidden potential in long-lasting relationships.” The authors offer guidelines to help companies embrace open innovation through the pandemic and beyond:

  • Forget about the IP for the moment: While concerns about oversharing valuable intellectual property are valid, Dahlander and Wallin note that during the Covid-19 crisis “it could be wise to focus more on creating value than capturing value.” Savvy organizations will focus on collaborating on important items, which may help them ramp up their own operations or form collaborations that will later prove fruitful.
  • Leverage two-sided motivation: While the initial rush of enthusiasm will carry the collaboration forward, over time it’s important to gain a deep understanding of each party’s motivation for participating. The authors’ research on open-source software notes a diverse range of motivations among developers, from the desire to build their resume, to strong feelings about the inherent transparency of code, to gaining access to complementary skills and assets. Put in the work ahead of time to understand motivating factors on all sides.
  • Embrace new partners: Vetting and establishing new partnerships involves time and risk; however, the shared crisis has led senior leaders to assume that risk. For example, Ford’s President and CEO Jim Hackett “says he has empowered his engineers and designers to be ‘scrappy and creative’ when collaborating with GE Healthcare to find solutions to the crisis.” Additionally, with everyone facing the same crisis, there are many more partners looking to collaborate.
  • Urgency leads transformation: In normal times, a company may crowdsource ideas, yet structural and organizational barriers often impede the execution process. The crisis has forced many companies to rethink their innovation infrastructure and rapidly remove barriers.

Ideally, organizations will embrace open innovation and other practices that unleash growth and as a result will be that much better prepared for the future.


What We’re Reading

Innovation in a crisis: why it is more critical than ever – McKinsey’s latest survey of over 200 organizations reveals that 90% feel the pandemic will fundamentally change the way they do business over the next 5 years. Yet many feel ill-equipped to face this challenge, with only “21% hav[ing] the expertise, resources, and commitment to pursue new growth successfully.” While organizations are understandably tightening belts and mitigating risks, McKinsey recommends the following actions:

  • Adapting the core to shifting customer needs
  • Identifying and quickly addressing new opportunity areas
  • Reevaluating the innovation initiative portfolio and ensuring resources are allocated appropriately
  • Building the foundation for post-crisis growth in order to remain competitive in the recovery period

Book Recommendation

Unlocking the Customer Value Chain book coverIn Unlocking the Customer Value Chain: How Decoupling Drives Customer Disruption, Harvard professor Thales Teixeira emphasizes the importance of thinking about disruption not from a technological standpoint, but from the standpoint of your customers’ desires to reduce the costs of acquiring goods and services. Based on eight years of research with tech companies and large incumbents, Teixeira emphasizes understanding the logic of customer needs and wants, specifically the customer value chain–the series of activities that customers perform in order to fulfill their needs and wants. Customer-centric business model innovation is a key theme in the book. A business model indicates how a company creates value (and for whom) and how it captures values (and from whom). Teixeira notes that from the customer standpoint, “a business model consists of the value a business creates for me, what it charges me in exchange for that value, and what value it erodes for me.” Companies need to map their own customer value chains to determine 1) Can we deliver more value in the value-creating activities without charging more 2) Can we afford to capture less in the value-charging activities, everything else being equal? 3) Can we reduce eroded customer value without diminishing what we’re offering or capturing? It is through decoupling this value chain that start-ups have eroded the value captured by large incumbents. Teixeira offers a roadmap that innovators can use to disrupt via decoupling:

Step 1: Identify a target segment and its customer value chain (CVC).
Step 2: Classify the CVC activities (according to whether they are value creating, eroding or charging).
Step 3: Identify weak links between CVC activities.
Step 4: Break the weak links.
Step 5: Predict how incumbents will respond.

To determine your company’s vulnerability to disruption, ask “how much time, money and effort must your customer expend to do business with your company? How much must she expend with a disruptor? Does the difference run in your favor or against you?” Teixeira also offers guidelines for companies to respond to and defend against disruption.

How are you developing customer-centric business models? Let us know—we would love to hear from you.

Browse Fisher College of Business faculty expert commentary about the pandemic and other relevant topics at Fisher Forefront.

The simple truth is this: there is no larger risk to your business than going against customers’ needs and wants.

Thales S. Teixeira, Unlocking the Customer Value Chain

  • June 2020 Newsletter

    Psychological Safety Boosts Inclusion and Innovation

    OnRamp Student MeetingOrganizational theorists have long touted the benefits of psychological safety. Harvard business professor Amy Edmondson first coined the term in 1999, and her research reveals how psychological safety helps organizations perform better. Google’s intensive study of teams listed it as the number one factor in its highest performing teams. It’s important to understand that psychological safety isn’t a sense of “coziness.” As Edmondson notes, “it describes a team climate characterized by interpersonal trust and mutual respect in which people feel comfortable being themselves.” She clarifies further: “what it’s about is candor…being direct, taking risks, being willing to say ‘I screwed that up’” and asking for help when needed. It’s particularly important for leaders to repeatedly model this behavior.

    Why is this so important? Psychological safety enables your team members to feel valued and included, so that they can do their best work. It enables members of your team from historically excluded groups to feel comfortable raising issues they may be experiencing as members of a non-majority group, so that you can build diverse and inclusive teams that outperform homogeneous teams. It enables everyone to pitch new ideas that could lead to successful new products, services or business models and to voice concerns about initiatives that aren’t going well, so that adjustments can be made.

    How can you build psychological safety? Edmondson offers three steps leaders need to do repeatedly: 1) set the stage; 2) invite engagement; and 3) respond productively. Setting the stage involves ensuring everyone is on board with the nature of the work you’re pursuing and the level of complexity and uncertainty. The more complexity and uncertainty, the more open feedback is needed. Leaders need to remind teams that their thoughts and feedback are integral to success. Managers can ask “what ideas do you have?” and “how can we test them quickly?” Inviting engagement involves continually asking “what are you experiencing with customers?” and “what help can I offer?” And most importantly, responding productively means avoiding anger or defensiveness if a project is off track or team members surface a problem or challenge an idea; instead, thank your team member for bringing the issue or idea forward. Then, discuss their needs and ideas for moving forward.


    Innovation in the Pandemic

    We continue to be impressed by ingenuity in response to the pandemic. A few recent examples:


    What We’re Reading (and Watching)

    McKinsey’s recent webinar, “5 Priorities for Rapid Recovery during COVID-19,” notes that the e-commerce acceleration of the past few months exceeded that of the prior ten years. McKinsey suggest methods for emerging stronger include multi-speed management; in other words, focusing two-thirds of our time on navigating the now, while reserving the remainder of our capabilities to focus on planning for the recovery and long-term growth. Organizations are also encouraged to reimagine their businesses to emerge stronger, noting that companies are twice as likely to be selected if their digital experience is outstanding. Other recommended focus areas include virtual agility, fast and data-driven decision-making, removing structural inefficiencies and reallocating resources to where it matters most.

    Book Recommendation

    IInnovator's Method Book Textn this innovation classic, The Innovator’s Method: Bringing the Lean Start-Up Into Your Organization, strategy professors and consultants Nathan Furr and Jeff Dyer offer a four-step process for turning uncertainty into opportunity by employing design thinking, jobs-to-be-done, and lean start-up methodology:

    1) Generate an insight

    Use techniques (associating, questioning, observing, networking, and experimenting) to search broadly for insights about problems worth solving.

    2) Deeply understand the customer problem

    Discover the job-to-be-done; rather than starting with solutions, start by exploring the customer’s needs or problem—the functional, social and emotional job the customer is trying to accomplish—so that you can pursue a problem worth solving.

    3) Rapidly prototype toward a great solution

    Instead of developing full-scale products, leverage theoretical and virtual prototypes of multiple solution dimensions. Then iterate on each solution to develop a minimum viable prototype and eventually a minimum awesome product.

    4) Align the business model with the solution to scale it

    Once you’ve nailed the solution, you’re ready to validate other components of the business model, including the pricing strategy, the customer acquisition strategy, and the cost structure strategy.

    Keep in mind that each step is critical and requires repeated experimentation to test major assumptions in a “hypothesis, test, learn” loop.

    How does this compare with your own innovation process? Let us know—we would love to hear from you.

    Browse Fisher College of Business faculty expert commentary about the pandemic and other relevant topics at Fisher Forefront.

    If you can increase the number of experiments you try from 100 to 1,000, you dramatically increase the innovations you produce.

    —Jeff Bezos, Founder and CEO, Amazon (quoted in The Innovator's Method)

  • May 2020 Newsletter

    Identifying Opportunity in Uncertain Times

    Poll resultsWe continued our speaker series virtually on May 20 with a discussion on “Identifying Opportunity in Uncertain Times,” featuring Jeff Curran, Founder of Innovation Outcomes, LLC and Innovation Leader at National Church Residences. While individuals and organizations grapple with this highly uncertain environment, innovation experts note that keeping an eye on changing business models and habits is a key area of focus right now. A recent article by innovation expert, Scott Anthony, noted that “new habit formation is often an early warning sign of disruptive change.” Clearly, new habits are being formed as people work from home, are cooking more, practicing social distancing, and engaging in new ways of working and living. Jeff Curran noted that the pandemic created an immediate change that brought on instant disruption for many businesses. Think of the restaurants who had not yet adopted online ordering or a delivery model – they either had to innovate quickly to online services, or face the potential end of their business. The pandemic is forcing innovation on a daily basis, and 72% of respondents (n=104) to our poll in the session noted that it was very important for companies to continue to invest in innovation and growth opportunities.
    View the webinar recording


    Join Us for Our Next Virtual Speaker Series

    Micah FeningManaging Innovation in the New Normal
    Thursday, June 4, 1:00-2:00pm
    Featuring Micah Fening and Jenny Young, Sr. Consultants, Nationwide Financial Innovation Team

    Jenny YoungOrganizations are grappling with unprecedented uncertainty while attempting to maintain forward momentum on initiatives that are crucial to future growth. How can we ensure that we are working on the most important projects, while balancing immediate customer and organizational needs? In this interactive discussion, innovation experts Micah Fening and Jenny Young will discuss how to prioritize near term, medium term, and long term initiatives and will also share tips for continuing to develop your organization’s innovation proficiency through virtual workshops and events.
     


    What We’re Reading

    Discovery-Driven Digital Transformation, by strategy expert Rita McGrath and Techtonic.io CEO Ryan McManus outlines a way for incumbent businesses to digitally transform their companies while minimizing disruption to the existing business. Based on the discovery-driven planning (DDP) methodology introduced by McGrath and colleague Ian McMillan in the 1990s that is now a foundation of lean start-up practices, the approach outlines five steps established companies can take to test out digital strategies and “learn their way toward a new business model.” As McGrath notes, “a discovery-driven approach gets leaders past the common barriers to digital transformation. By starting small, spending a little on an ongoing portfolio of experiments, and learning a lot, you can win early supporters and early adopters. By then moving quickly and demonstrating clear impact on financial performance indicators, you can build a case for and learn your way into a digital strategy.”

    How Innovation is Driving Productivity During and Beyond the COVID-19 Pandemic – “Every single one of the technologies upon which the world now depends on to function…is the result of years - and often decades - of vision, leadership, expertise, perseverance, big bets, a healthy flow of investment in R&D, dependable intellectual property protections, and affordable technology licensing. If the value of the massive investments in technology and innovation that we saw over the last ten to twenty years wasn’t already abundantly clear before this crisis, it should be now, particularly in several areas that have played a critical role in helping us adapt to the radical changes that were thrust upon us so suddenly: Network connectivity, the digital devices that we interface with, and the software that powers them.” The author goes on to note that continued investment in innovation is crucial, particularly in fundamental R&D and connectivity. 

    Browse Fisher College of Business faculty expert commentary about the pandemic and other relevant topics at Fisher Forefront.

    A company stalls because the things they believed the longest or the things that they believe the most deeply are no longer valid. Basically, what they know is no longer true.

    —Matthew Olson, Derek van Bever, and Seth Verry (quoted in Seeing Around Corners)

  • April 2020 Newsletter

    Is COVID-19 Our Next Sputnik Moment?

    Earth photoOur team, like all of you, has been grappling with the immense changes wrought by the pandemic. A recent question we discussed was whether the pandemic is another Sputnik moment, the 1957 Soviet launch of the first human-made object to orbit the Earth, which galvanized the space race between the U.S. and the Soviet Union. The ensuing panic that the U.S. was woefully behind in technological terms spurred significant government investment in science and education. In response, the Defense Advanced Research Projects Agency (DARPA) was created in February 1958 to build and maintain the technological superiority of the United States with respect to military objectives. DARPA is credited with laying the ground work for many technologies that have driven decades of economic growth, from the foundation for the internet, Wi-Fi, supercomputing, GPS, robotics, AI, voice recognition and more.

    While COVID-19 is a biological threat rather than a military threat, it is an urgent reminder of how public health and economic health are tightly coupled. Providing military protection to our citizens is a public good. Likewise, providing for the public health, particularly in the aftermath of the pandemic, will highlight the importance of providing for overall health as a public good, driving public and private investment. As a recent Forbes article notes, COVID-19 reminds us why innovation is often a public good. We are seeing fast movement along these lines;a public-private partnership was formed in mid-March, leveraging AI to review and uncover insights from the avalanche of scientific research related to the pandemic. Such innovations will advance our progress toward a vaccine as well as accelerate the applicability of AI to other use cases in the long term. Our hope is that the many innovations arising from this pandemic will foster a new era of investment in innovation for the public good, driving future economic growth and providing a stronger foundation from which to combat complex challenges such as global health crises and climate change.

    Necessity Drives Innovation

    We’re seeing many examples of real-time innovation in response to the pandemic, from an agile bakery owner who adeptly transitioned to a free delivery site for local eateries, to 3D printing of medical supplies. Here are just a few we’d like to share. Let us know how your own organization is innovating in real time.

    Local bakery owner rolls out free delivery site for Seattle businessesXRHealth to provide medical center’s coronavirus patients in quarantine with virtual reality telehealth servicesFDA approves Ohio State COVID-19 test kit innovations: sterile transport solution and 3D printed swabsHow hospitals are using AI to battle COVID-19Why a coronavirus vaccine takes over a year to produce - and why that is incredibly fast

    What We’re Reading

    Don’t Let Uncertainty Paralyze You – Innovation and strategy expert Nathan Furr offers tips for managing uncertainty, based on his research with people who excel in the face of uncertainty (innovators, entrepreneurs, CEOs, Nobel Prize winners, etc.) He encourages us to develop our “uncertainty capability” with three habits: 1) Open our eyes to all options, present and future; avoid becoming so focused on the immediate situation that we overlook the broader context and make rash decisions; 2) Think in terms of probabilities; avoid either/or thinking and consider the range of outcomes, and the probability of each; and 3) Remember that possibilities always exist, even in the face of tragedy. Here the author invokes a powerful quote from Victor Frankl. “Everything can be taken [from a person] but one thing: the last of human freedoms—to choose one’s attitude in a given set of circumstances, to choose one’s own way.”

    Book Recommendation

    Seeing Around Corners, by acclaimed strategy expert Rita McGrath, offers tips and frameworks forSeeing Around Corners book cover identifying major shifts in the business landscape—inflection points—before they happen. Clearly, the pandemic is a momentous inflection point, where major assumptions have been immediately called into question. She provides 8 practices leaders across an organization can employ to avoid being blindsided by inflection points.

    1. Ensure direct connection between the people at the edges of your company and the people making strategy.
    2. Go out of your way to include diverse perspectives in thinking about implications for the future.
    3. Use deliberate decision-making processes for consequential and irreversible decisions. Use small, agile, empowered teams for reversible experimental decisions.
    4. Foster little bets that are rich in learning, ideally distributed across the organization.
    5. Pursue contact with the environment – “get out of the building.”
    6. Make sure your people are incentivized to hear about the reality, not the reverse.
    7. Realize when your people are in denial.
    8. Expose yourself and your organization to where the future is unfolding today.

    Which of these 8 practices are you doing well? Which do you need assistance with? Let us know if you would like to discuss these tips or other innovation practices—we would love to hear from you

    Entrepreneurship and innovation can be achieved by any business...They can be learned, but it requires effort. Entrepreneurial businesses are disciplined about it...they work at it...they practice it.

    —Peter Drucker

  • March 2020 Newsletter

    Maintaining a Growth Mindset in a Different World

    Growth mindset mindOur lives have shifted beyond recognition within just a few weeks. Businesses and individuals are rapidly adapting, and our personal and professional domains will be forever changed as a result of the COVID-19 pandemic. While we are all intensely focused on managing our families, work and households through this crisis, we may also be asking big questions. How can we make decisions when faced with this much uncertainty? What does the future hold for us personally and professionally? In times like these, adopting a growth mindset is of even greater importance.

    Many of us are familiar with the concept of growth vs. fixed mindset based on the work of psychologist Carol Dweck. She notes that individuals who believe their talents can be developed have a growth mindset, and that “they tend to achieve more than those with a fixed mindset (those who believe their talents are innate gifts)” because they are more open to learning and less worried about appearing to be smart. In “What Having a Growth Mindset Actually Means,” Dweck states that “organizations that embody a growth mindset encourage appropriate risk-taking, knowing that some risks won’t work out. They reward employees for important and useful lessons learned, even if a project does not meet its original goals. They support collaboration across organizational boundaries rather than competition among employees or units.” Exhibiting a growth mindset involves “sharing information, collaborating, innovating, seeking feedback, or admitting errors.” When faced with uncertainty, sharing information, collaborating, seeking feedback and admitting mistakes will help us develop new solutions and rapidly adapt to changing circumstances, so that we can help our organizations achieve their goals.

    It can be challenging to remain in a growth mindset mode, particularly when we are stressed or face setbacks or criticism. According to Dweck, “Everyone is actually a mixture of fixed and growth mindsets, and that mixture continually evolves with experience.” We also have our own “fixed-mindset triggers.” The good news is we can learn to recognize triggers that make us feel threatened or defensive, and learn to remain in growth-mindset mode, where we can learn as well as develop and test new solutions. As we adapt and build resilience in response to the pandemic, may we all remind ourselves to employ a growth mindset as we learn to live and work differently in these challenging times.

    OnRamp Continues Virtually Via Zoom

    OnRamp on ZoomWe are pleased to report that we are continuing OnRamp, our student innovation program, through Zoom. Students will work virtually in teams to assist our current OnRamp sponsoring companies, Honda and Nationwide, with their innovation challenges. After Ohio State’s spring break was extended and classes moved online, Christian Lampasso, student program manager, quickly revised the OnRamp schedule and format to be delivered via Zoom. Currently, the student teams have wrapped up their customer validation and are now proceeding to mine data insights and unmet customer needs. The virtual whiteboard Miro has come in handy as each of the student teams collaborate to create post-it note categorization, customer personas, and journey maps. Moving forward, the teams will reveal their findings to their respective company sponsors, with a goal of presenting insights and unmet customer needs that may be sources of future value.

    Learn more about OnRamp

    Contact Christian Lampasso for more information, Lampasso.1@osu.edu.
     

    What We’re Reading

    As we settle in to this new normal, we’ve been focused on how companies are managing these huge changes. Some compelling reading includes:

    Covid-19 Implications for BusinessMcKinsey: “Responding to Coronavirus: The Minimum Viable Nerve Center” offers a framework (discover, decide, design, deliver) for understanding common crisis management failures and a graphic depiction of how an organization might design an integrated COVID-19 nerve center. McKinsey also offers frequent analysis of COVID-19’s implications for business.

    Harvard Business Review: A throwback to 2010, Roaring out of a Recession reveals results of a study of how 4,700 companies responded to prior recessions. The authors note four types of organizational responses to a slowdown: prevention, promotion, pragmatic and progressive. The study “suggests that enterprises that cut costs by focusing on operating efficiency even as they spend more than rivals on marketing, R&D, and assets are likely to be post-recession winners.” Companies that only drastically cut costs didn’t flourish after the recession ended. During recessions, progressive companies invest in both existing and new businesses, and “stay closely connected to customer needs—a powerful filter through which to make investment decisions.”

    Book Recommendation

    Dual Transformation book titleDual Transformation: How to Reposition Today’s Business While Creating the Future, by Scott D. Anthony, Clark Gilbert, and Mark W. Johnson. Check out this brief 2 minute video for an overview of how to maintain your existing business while creating future growth engines.

     

     

    The secret of change is to focus all of your energy, not on fighting the old, but building on the new.

    —Socrates