FreshNetworks Blog

Innovation is a common topic of debate and strategies in most businesses (be they new or well established). In the current economic climate, and with the huge potential of the likes of social media data, brands are increasingly looking at innovation (large and small) as a way to beat the competition.

But innovation is often misunderstood. After a recent event debating the topic at the Open University Business School, I left with some insights into what the attendees thought that innovation was, and some misconceptions about what it has to be (but doesn’t):

Five things that innovation is

1. Innovation and growth are inextricably linked, according to the BBC’s Evan Davis. He surmised that innovation hasn’t come to a standstill in 2012, although we do have a growth problem which innovation itself will be crucial to solving.
2. Delicate. It’s important to nurture it gently so as not to kill it off too quickly, but also carefully contain and manage it to prevent any huge financial, market, or reputational fires.
3. More prevalent during recessions. The atmosphere of fear engendered by recession is often the trigger required to force organisations to adapt and survive (as opposed to ending up at the decline end of the sigmoid curve, such as Kodak), as well as being ideal for start-ups. Recessions tend to shake out the worst performers, and those simply coasting along with the status quo.
4. Often within your team already. Any business is likely to have great ideas and innovators already within the team. An open and creative organisational culture and office space is crucial to finding, developing, and encouraging these employees, who will always move to another company (possibly a competitor) to innovate if they can’t do so where they are.
5. Often the victim of resistance and sabotage. Some tactics to look out for and actively surface and manage include Peter Keen’s “lay low”, and “keep the project complex, hard to coordinate, and vaguely defined”. Plus also the wonderfully expressed “Say yes! But do nothing”.

Five things that innovation doesn’t have to be

1. Big or complex. Sometimes the best innovation can come through a series of incremental steps which ultimately amounts to something quite large, impactful and radical. Such gradual change can often be more palatable in businesses.
2. Hugely expensive or driven forward by companies. As demonstrated by the user-led innovations of the maker movement, and also Jugaad Innovation’s more flexible, frugal, and bottom-up approach.
3. A risky business. At least not to the innovators – who have complete faith in their idea. It’s the financial backers who are taking the risks. However, if we’re taking an incremental approach, perhaps that can help reduce the overall risk by breaking innovation up into more manageable and less intimidating or costly chunks.
4. A driver to cut costs. As it’s enabling many companies to retain their current cost bases but stretch those resources further into more countries and ventures.
5. About technology. Thinking and process innovations show it’s not just about technology (e.g. queuing), and service innovations prove it’s not only about products either. Nevertheless, technology is certainly vital, and SAP UK’s CTO Adrian Simpson explored how innovation is being shaped by greater mobility (e.g. increase in mobile devices), social media and networks, the cloud, and huge data sets (including social data).

Ultimately, innovation seems to depend on persistence, belief, adaptability, and relevance to customers and the market. While its success relies on people, behaviour and skills, and spotting and pursuing the opportunity before it’s too late. Undoubtedly money and resources help, but perhaps more of a barrier exists in the minds of employees and cultures of organisations?

Reflections in the City (Photo credit: masochismtango)

This comes as no surprise – levels of social media adoption inside brands can be much lower than among their consumers, or indeed among their newer employees. But when you do engage a senior team with the opportunities that can come from social you tend to find that they become some of the most vociferous enthusiasts.A recent study by IBM found that only 16% of global CEOs are taking part in social media, and only 1 of the more than 1,700 CEOs interviewed had their own blog. They recognise the potential power of engaging in social (with 57% expecting to be engaging within 3-5 years); but the levels of participation are currently low.

Richard Branson wrote about this survey to say he was surprised by the low levels of social media use and to encourage other CEOs to take part:

…like all other areas of business, CEOs have the opportunity to set the bar. By ignoring social networks, they are potentially missing a trick.

There are many reasons why CEOs and the senior team should be engaging with social media and not just because it sets the bar for how the rest of the organisation behaves. The people buying your products and the newer recruits into the organisation are all using social media, and its importance will continue to increase. To make sensible business decisions in this climate CEOs really need to understand what social media is, and what it isn’t.

This does not mean that all CEOs should be actively using Twitter to engage with customers – we’ve written before about the confusing way the @StarbucksUKMD account has been used. But it does mean experimenting and trying things out – maybe joining a running forum to discuss their training with other athletes, or setting up a Pinterest account to bring together items they are considering for their new home.

It is the act of experimenting with and learning from social that is important for C-level; understanding the tools their consumers and employees have and the different ways they are engaging with others. Only by experimenting and using the tools themselves will they be able to really understand how their business could benefit from social. And by encouraging a process of experimenting with new tools and services from the most senior levels, a culture of innovation can grow more successfully through an organisation.

For any brand exploring the transformative impact of social, C-level buy-in is critical. And to get this you need a clear process of education as well as to encourage these executives to experiment with social in their personal and professional lives.

Nick Hungerford, CEO of Nutmeg

Last week we caught up with Nick Hungerford, CEO of the new client investment management company Nutmeg.  We think this is a business with the potential to really disrupt the investment market for a number of reasons. Firstly it is positioned perfectly to take advantage of the Retail Distribution Review (RDR), coming into force in 2013, which will make investors much wiser about the fees they are actually paying their advisors. Nutmeg offers a combination of total transparency and low fees thanks to its strategy of investing in the burgeoning Exchange Traded Funds (ETF) market.  Nutmeg has also tapped into the online banking and social media trends – offering a slick user interface and backed by investors that include Tim Draper and Spotify board member Klaus Hommels.

It was only a matter of time for social media technologies to start disrupting the financial services market and we’ve written about some of our predictions before.  We’ve seen interesting companies like Friendsurance using a peer-to-peer model  - combining social networks with insurance services – to lower premiums and Polish bank Alior Sync enabling customers to make financial payments through Facebook.

Q: What was the inspiration for starting Nutmeg?

A:  I’d been working in Financial Services for 7-8 years and I always found it remarkable that even though finance and investment is applicable to everyone regardless of wealth, private banks only deal with the extremely wealthy. Friends/family would ask me for help with investments but I would have to turn them down.  At that point I started talking to investors/smart people working in tech industries. They all said the same thing, “I want to invest online, I want a smart solution and I don’t want to pay someone too much.” At that point it became obvious there was an opportunity to disrupt the financial services industry.

Q:  Do you see a threat from other trusted consumer brands diversifying into this kind of financial service?

A:   It takes you into an entirely new regulatory arena. People often ask me, “Why wouldn’t Google or Facebook do this” but it requires a massive change to their business culture. If they start managing money they have to take on financial professionals. Becoming an investment manager is a totally different ball game. Having said that, we do want there to be more people like us, driving change in the industry.

H:  How do you encourage people to take that first step to invest and put something away for a rainy day?

There is an education curve. Nutmeg is a site you come to learn about investing, money and how to save. Then, when you are ready, you can choose to invest. We are starting with those people who are used to internet banking/investing, are familiar to other online services out there and like the user experience. Perhaps they’ve had an account with a broker but don’t want to spend so much on fees anymore.  I like the analogy of internet banking – at first it was daunting to use that service but now I never go in branch at all and I’m not alone – Britain has one of the highest adoption rates in the world for internet banking and I’m sure we’ll get there for saving and investing. We only need a fraction of the market to be a giant company.

Q:  Your educational content is key to your growth, what’s on the roadmap?

A:  We know that people care most about important financial decisions, like buying a house or car. We want to inform people of what and why we are investing in things, give them a clear monthly update in a non-obnoxious, easy to understand way so they know where their money is and how it’s doing.

Q:  You are currently investing in ETFs, could you explain that a little more to the uninitiated?

A: It’s a collection of investments that track an exchange, index or sector – so you buy a little bit of lots of different things in order to get diversification.  They are also low cost and 30 years of research proves 75% of active funds (or thereabouts) underperform and not just because of the fees. It’s very obvious that trackers and low cost funds are an increasingly attractive way to go.

Q:  Nutmeg is using social media in innovative ways to drive recommendations (offering fee discounts in return for social recommendations). How else will Nutmeg use social media to become a social business?

A:  We are looking at the sharing of ambitions and goals with friends and family and allowing for social investment.  So what if a group of friends wanted to pool their money into a fund that pays for them all to all go on holiday every year? From our perspective social media is about how we get people engaged around their money.  Nutmeg is the first to do what we do and we have a great chance to change things in the industry for the better.

Change Priorities (Photo credit: Christine ™)

When brands think about using social media across their business, the focus is usually on the things you will do, the tools you will have in place, the audiences you will work with and how you will report on progress. But more often than not any social business initiatives will need cultural change in your own teams if they are really to be a success.

Any new social initiative should not just be about bolting something on to an existing campaign, process or activity; initiatives that are done like this are the most difficult to make work. Social will have biggest impact when it is more fundamental to what you are trying to do.

So rather than just adding a Twitter account to an existing customer service channel, the real return will be when you think about ways to start redesigning your customer service based on consumer behaviour and the tools that are available.

And to make the most of things that are this fundamental you need cultural change in any organisation if they are to be a success.

When thinking about cultural change there are usually three main considerations:

1. Do your team really understand the role social plays for you?

Most people will use some form of social media in their personal life, and the danger is to take this understanding and behaviour into the workplace. That’s not necessarily the most useful way of thinking of social business. Whilst you are unlikely to articulate clear objectives for your personal Facebook page, or to plan content for the next three months, it is critical you do this as a business.

Your team need to truly understand what social means for a business, and specifically what it means for your business and for their role.

2. Do your team have the skills to make the most of social?

For anybody, social presents new opportunities and also new skills that need to be learned – technologies are changing and consumer behaviours are changing so businesses need to be able to constantly adapt to capitalise on these.

Education and a forum for sharing what is happening are critical to the success of any social business, and this needs to be at all levels but is critically important at senior executive level. Those people driving the business need to understand the opportunities (and limitations) of social if they are to effect real change.

3. Is your team structured in the right way for social?

Many of the ways we structure organisations are based on the traditional ways we have and still work. And they are often effective. But when you are thinking about social business you should consider if these same structures and processes work.

If you are redesigning your customer care processes, for example, do you still need the team to come to a central office every day? Should they all be working office hours or the hours you get most interactions in social media? Even should customer service in social be done by a particular team alone or be supported actively by people across the business who work in the areas being discussed.

The danger with social media is that you focus on what you are doing and that you bolt it on to existing processes, programmes and campaigns. That is always a real shame – you will probably miss the real opportunities that exist across your business, and when you think about social business in this way you will need to consider internal cultural change if it is to really work.

At the heart of most notions of social business is collaboration: helping people work together better with social technologies. This is a reductive definition, social business is much more than that…but that is for another blog post.

I have been thinking a lot recently about collaboration and organisational culture, and why social business will fail if we leave it to the software providers. No piece of software is going to fix a culture that isn’t committed to collaborating.

On a personal level, since we all prize team-work, many people think collaboration comes naturally to them. And when it works well, we think we’re doing a good job naturally. In easy situations, where we all like each other and we’ve collaborated before and it’s been a success this is the case. But to assume this is all an involuntary behaviour is wrong. True collaboration is actually hard work and a bit painful at times.

So what happens when collaboration goes bad. And what we can do to fix it?

Great collaboration

A couple of weeks ago Brazilian Terezinha Guilhermina won gold in the womens’ 100m sprint. One of the reasons this was remarkable is she is blind. She ran the race alongside her guide Gilhermay Soares de Santana.

Seeing Terezinha and Gilhermay storm down the track was awesome, in its most literal sense. To train to win a 100m sprint is an incredible endeavour. To do it blind is unimaginable. To be the guide that trains just as hard to get someone else down that track to win…. that is amazing collaboration.

It reminded me of a quote from Group Genius by Keith Sawyer who describes the Wright brothers who are credited with inventing the first plane. He says:

The Wrights drew on the power of collaboration. They allowed their innovation to unfold from constant conversation and side-by-side work.

In other words great communication and proximity.

Sawyer is a Professor of Education and Psychology at Washington University and has studied creativity and innovation. He’s also a jazz musician.

He believes that true creativity is not a singular process – an individual having a light bulb moment and inventing a car. Rather it is an iterative additive collaborative thing. So he set to work studying the ultimate collaborators: improv artists – in the theatre and jazz bands.

I don’t have time to do his work justice. So I shall play fast and loose with his work and focus on three attributes of great collaboration according to Sawyer and then flip them to see if we can learn anything about why it can be so problematic.

One: “Successful collaborative teams practice deep listening”

Do we spend enough time listening to and observing others? Are we truly open to someone else’s input? This might require subordinating our egos. This requires confidence.

Two: “Team members build on their collaborators’ ideas”

Are we wrongly dogged in pursuing a different agenda? We might need to admit that our idea needs more work or is even wrong. This requires bravery.

Three: “Innovation emerges from the bottom up”

Improv performances are self organising – no director and no script. The best collaborative teams form spontaneously. So if we get hung up about our status or others – “it’s not my job to do that,” or “I’m too senior to play a supporting role” – we will not succeed. This requires flexibility.

Think about culture before software

So if collaboration isn’t effective in your business, before reviewing the many collaboration software options out there, it’s worth considering whether there are five cultural issues that need addressing.

• Communication – are your teams in regular effective conversation?
• Proximity – are they working together closely?
• Confidence – are they self assured enough to listen to others and subordinate their own opinions?
• Bravery – will they admit they’re wrong?
• Flexibility – will they make a contribution based on their talents in spite of corporate hierarchies?

Photo credit: wired witch on Flickr