Innovation - April 2008

At Pitney Bowes, we have done a lot of thinking about how to innovate successfully. As a result, we have challenged conventional wisdom about how innovation actually occurs. There are two traditional views about innovation with which I am familiar:

• One is the idea that institutions have large research and development budgets, begin a number of projects, have many failures, and funnel down to a handful of successes. The “funnel” metaphor is used to describe this idea.
• The second is the idea that organizations either invest in entrepreneurial companies, or create entrepreneurial “skunkworks” which operate outside the company’s annual budgeting processes and produce innovation. This was a popular theory, supported by the IBM PC launch in the early 1980’s.

Both views are flawed, because they oversimplify how innovation really happens. I got the best insight on innovation from my 15-year-old daughter, who is not only a serious musician, playing the harp, flute, and piano, but an avid student of popular music history. She read and gave me a copy of Bill Wyman’s Rolling with the Stones. Wyman was one of the founding members of the Rolling Stones.

I had always believed that Mick Jagger and Keith Richards had formed the band and that, after a couple years of performing, they became fabulously successful because of the path blazed by the Beatles. The reality is much more interesting and complex, in many ways:

• The great British bands of the 1960’s all were influenced by a combination of American blues and jazz music, as well as innovative American rock musicians like Buddy Holly, and a British musical style called “skiffle” music. (The Rolling Stones had a hit covering Holly’s song Not Fade Away.)
• All of them experimented with not only musical styles, but modifying musical instruments, at many of the London clubs, and they worked separately for quite a few years with many other bands before coming together. Brian Jones, one of the other founding members of the Stones, experimented with quite a few combinations of musicians before the group settled on the five who would become its longer-term members.
• The Stones experimented quite a bit even after coming together on different styles and sounds, and borrowed from previously-composed songs that they had discarded or which had not been hits.
• None of the musicians started out knowing where they would end up. There was a fair amount of reacting to events as they happened, and adapting to those changed conditions.

We have discovered that corporate innovation follows the same path. This BusinessWeek article demonstrates how corporations are consistently strategizing to respond to the rapidly growing demand for innovation, most recently cited as “The Innovation Movement”. The “funnel” methodology is flawed because there is not always a clear line between successes and failures. More often than not, an ultimate success is a combination of pieces of innovations from several previous projects, some of which were considered failures at the time. For example, we had a sizable research and development project to build a low-cost mixed mail sorter. We never succeeded, but we eventually borrowed some of the paper-handling innovations from that project to incorporate into our Olympus Multi-Tier sorter system years later.

We had a combination of both entrepreneurs who came from companies we acquired and members of our traditional research and development groups. We also learned from outside partnerships, both corporate and university-based. The sources of innovation were more diverse and less traditional or predictable than we would have thought.

We also did not end up where we started out. Market conditions and learnings often changed what we did. For example, online postage was originally seen by some of the dot.com start-ups as a clear alternative to the postage meter and the stamp for ordinary letters. However, it morphed into a great solution for parcel shipments, such as those which follow an e-Bay auction sale, and it became the backbone for downloading personalized stamp images.

This Innovation Blog reviews some examples of innovation trends and tangible tactics companies have used to innovate.

Most important is having an openness to seeing what can work and what new needs emerge over time, rather than following a rigid formula. Almost as important is not drawing the artificial distinction between “entrepreneurial” people and “corporate” types of product developers. By no stretch of the imagination would I be considered an “entrepreneur,” but I am now a co-inventor on nine U.S. patents, because we have an environment that encourages even senior executives to think like inventors.

I also want to compliment my daughter, who kept insisting that I read the book and learn more about the Rolling Stones. I have found all of our children to be great at pushing my wife and me beyond our comfort zones by their interests. As a senior leader, I have found myself pushed by people throughout the organization to think beyond my comfort zone.