How Innovation Really Works

U.S. Companies are failing at innovation!

That bold statement was at the top of a letter I received, and it got my attention. I started to read about the reasons many organizations are struggling to innovate. It led me to the research by Anne Marie Knott, PhD. She’s a Professor of Strategy at the Olin Business School of Washington University. She was previously an Assistant Professor at the Wharton School. Her research is focused on innovation ranging from entrepreneurship to large-scale R&D. Her new book is How Innovation Really Works: Using the Trillion-Dollar R&D Fix to Drive Growth .

I followed up with her to talk about innovation, R&D, and what can be done about the current problem.

 

Companies Have Become Worse at Innovation

You say that companies have become worse at innovation despite the fact that it’s more important than ever. Why is this?

While companies have become worse at innovation, I don’t actually argue that innovation is more important than ever. It has always been the chief source of companies’ as well as the economy’s growth. I think the reason if feels innovation is more important is that companies’ R&D is only 1/3 as productive as it was in the past. Therefore, they need to do three times as much to generate the growth they used to enjoy–actually more than three times because each additional R&D dollar is less productive.

 

Research: Companies’ R&D is only 1/3 as productive as it was in the past.

 

What’s RQ?  

The catchy answer is that RQTM (short for research quotient) is the company equivalent of individual IQ—it’s how smart companies are.  The precise answer is that RQ is the percentage increase in revenues a company gets from a 1% increase in R&D investment.  So companies that have high RQs derive more revenue, profits and market value per dollar of R&D than low RQ companies.

 

How was it developed?

I didn’t set out to develop RQ (though I knew I needed such a measure from my time in industry).  I actually stumbled upon it while trying to solve an academic puzzle, in much the same way that Percy Spencer stumbled on microwave cooking while working on combat radar systems for Raytheon.

Once I discovered RQ, however, I went through a similar process companies go through with their R&D.  I worked out the theory to characterize how it related to growth; I tested alternative versions; then I validated that the current version matches theoretical predictions using 47 years of data across the full spectrum of US companies conducting R&D.

 

What are its implications?

RQ has a number of implications.  First, by tracking their RQ over time, companies can determine whether their R&D capability is improving or deteriorating.  If companies could have done this 30 years ago, it’s likely R&D capability wouldn’t have deteriorated so much.  Second, because RQ is derived from economic theory, companies can use RQ to determine how much an additional dollar of R&D should increase revenues, profits and market value—this helps them set their R&D budgets.  Third, RQ provides investors a way to value R&D, so now even Warren Buffet can invest in technology firms.  More importantly, when investors know how to value R&D, they won’t pressure companies to cut R&D in pursuit of current profits

 

Why Most Companies Fail at R&D

Why do most companies fail at R&D?
“Failing” probably applies more to projects than to entire R&D systems (which is where RQ applies), but if you’re asking why companies have gotten worse at R&D, I have a few thoughts.  I’m going outside the range of my evidence with this answer, but I believe the demise began with the “financial management” trend in the 1980s.  This was the idea that any company could be managed by anyone simply by controlling “the numbers” (think T. Boone Pickens and Carl Icahn). “The numbers” meant cost reduction in the case of operations and rank ordering investments by ROI (return on investment) in the case of new investment.  R&D can’t be managed that way.  A good R&D system has many longshots.  On average Industrial Research Institute (IRI) member companies report that it takes 125 funded projects to achieve a single commercial success.  The problem is that no “number” can identify the single success up front.  Companies have to carry portfolios of projects with the hope that that the “1 in 125” is in there.  If you throw out all the projects whose ROI can’t be quantified with confidence, you throw out all the lasers, geosynchronous satellites, and other exciting things we developed at Hughes.

 

“The most widely held misconception is that R&D should be more relevant.” -Anne Marie Knott

 

Your book walks through several misconceptions about innovation. Let’s talk about just one.

The most widely held misconception (80% of consultants and 90% of investment analysts/managers) is that R&D should be more relevant. This seems completely plausible.  After all, who wants to be “irrelevant.” The problem with that logic is best captured by the Steve Jobs quote, “A lot of times, people don’t know what they want until you show it to them.”  He’s entirely correct, as the iPod, iPad and most especially iPhone attest.  Work done by researchers at Duke supports his intuition.  Ashish Arora, Wes Cohen and John Walsh found that while customers are the most prevalent source of external ideas, those ideas have the lowest ability to increase sales.

 

“People don’t know what they want until you show it to them.” -Steve Jobs

 

Companies need more radical innovation. Would you share some context about this misconception?

3 Keys to Negotiating Success

3 Keys to Negotiating Success

 

Do people take advantage of you?

Do you let your emotions get in the way of your negotiations?

Do you want to be a better negotiator?

 

Corey Kupfer has negotiated successful deals for over 30 years as an entrepreneur and lawyer, and is committed to inspiring authenticity in business. Kupfer runs his own firm, Kupfer & Associates, PLLC, and founded a speaking, training and consulting company called Authentic Enterprises, LLC. He’s the author of Authentic Negotiating: Clarity, Detachment & Equilibrium – The Three Keys to True Negotiating Success & How to Achieve Them.

I recently spoke with him about the three keys to authentic negotiations.

 

“You do not get what you want. You get what you negotiate.” -Harvey Mackey

 

Authentic Negotiations

Your book title starts with the word authentic. That’s not usually a descriptor of negotiating styles. I’d love to know more about your approach and this uniqueness.

My teachings, based on over 30 years of day-in and day-out professional business negotiating, are mainly focused on the personal and deep internal work you need to do to become a great negotiator: Clarity, Detachment and Equilibrium (or CDE).  A lot of negotiating training is on the level of techniques, tactics and counter-tactics.  Some of those are very manipulative, lack integrity, and are ultimately ineffective – so they should never be used.  Some are okay, but they are not at the core of true negotiating success.  At best, they are good to know as additional tools beyond the deeper and more important work of authentic negotiating.  Without Clarity, Detachment and Equilibrium, tactics and counter-tactics will be of marginal impact at best.

Authentic negotiators get total clarity on what will work and won’t work for them on every significant term and what their true bottom line is – from a place of clarity, not ego. They then stay detached from the outcome. They have no hesitation to walk away from a negotiation – not from a place of anger or ego but, instead, from a place of clarity with no upset, judgement or hard feelings.  Finally, they maintain their equilibrium throughout the negotiating process and don’t let their emotions throw them off so that they are able to stay present to and maintain their clarity and detachment.  Although, of course, leverage matters, in over 30 years of professional negotiating, I found that the most impactful common controllable elements are those three things – not the negotiating tactics and counter-tactics that many of us have been taught.

I’ve actually created a quiz where people can learn if they are an authentic negotiator, which can be found at CoreyKupfer.com.

 

“Authentic negotiators determine their true bottom line from a place of clarity, not ego.” –Corey Kupfer

 

The Top 6 Reasons for Negotiation Fails

What are some of the most common errors people make negotiating?

The top six reasons negotiations fail are:

  1. Lack of preparation – external preparation and, the often overlooked, internal preparation which requires doing the deep inner work to get clear on your objectives and determine your true bottom line on every material deal point.
  2. Ego – including avoiding the pitfalls of pride, wanting to be liked, wanting to win and talking too much.
  3. Fear – including fear of losing, failure, success, the unknown and looking bad or letting someone down.
  4. Rigidity – including pre-conceived notions and the danger of inflexibility.
  5. Getting emotional/losing objectivity – which can kill a deal because you fall in love with a bad deal or it can push you in the wrong direction.
  6. Lack of integrity – with others and, less talked about but as important, with yourself.

Here are some additional specific reasons that fall under the various larger categories above:

  • Talking too much which is most often triggered by either ego or fear.
  • Not listening.
  • Thinking of negotiation as a game.
  • Being focused on winning instead of achieving objectives.
  • Letting emotions get in the way of your clarity, detachment or equilibrium.
  • Not getting connected to a powerful context.
  • Not knowing your purpose for the negotiation.
  • Not determining the measurable results you want to achieve.
  • Not holding high expectations.
  • Having unreasonable expectations.
  • Not understanding the natural negotiating rhythm and moving either too fast or slow.
  • Not being aware and prepared for cultural differences.

 

“Diplomacy is the art of letting someone else have your way.” – Sir David Frost

 

Do skilled negotiators often exploit these errors? If they know the issue is “getting emotional/losing objectivity” do they deliberately work to have one side off balance in this way?

Absolutely!  Manipulative negotiators are going to look to take advantage of every weakness they see in you and use it to their advantage.  They will leverage that emotional imbalance the most they can even though it would be shortsighted to do so, especially in one of the many negotiations that results in an ongoing relationship.  Authentic negotiators will use these errors to their benefit as well, though.  There is a way to do that which is authentic and not manipulative.  It is the difference between paying attention to the information and leveraging opportunities that emotion reveals to help attain your objectives vs. actively manipulating people’s emotions.  For example, if somebody is the type of person who emotionally needs to feel like they have won a negotiation, I will design my negotiating strategy with that in mind.  As long as I achieve my objectives, I am happy to have them feel like they have won.  The difference in the authentic approach is that my focus is achieving my objectives, not using their need to win to take advantage of them and manipulate that need to get as much as I can at the expense of the ongoing relationship or getting a reputation as a negotiator who takes advantage of others.

 

“Manipulative negotiators leverage emotional imbalance.” –Corey Kupfer

 

Use Context – Purpose – Results

Discover Your Unique Communication Style

Know Your Presentation Persona

 

What if each of us has a unique presentation style?

What if you could discover what it is and use it to your advantage when giving a speech?

 

FACT: 30 million speakers take the stage every day

 

Have you ever messed up a presentation or speech?

It could very well be because you didn’t know your natural style. By not knowing your unique strengths, you missed the opportunity to tap into what works for you.

If you want to be a better speaker or just improve your comfort level in front of groups, this post is for you.

Scott Schwertly is the founder and CEO of Ethos3, a presentation design and training company with clients ranging from Guy Kawasaki to Fortune 500 Companies. In fact, I personally utilized Ethos3 for two major keynote presentations. I can speak from personal experience that Scott and his team are exceptionally talented at creating memorable presentations.

I recently spoke with Scott about his new book, What’s Your Presentation Persona?

 

Build Your Self-Awareness

Why is self-awareness so important for presenters?

Self-awareness is absolutely critical for presenters because it means they are aware of their strengths and weaknesses when giving a presentation. It also showcases that they are clearly aware of which audiences will adore them or challenge them. Without this knowledge, a presenter can only guess and assume, which is a dangerous situation.

 

“Self-awareness is probably the most important thing toward being a champion.” –Billie Jean King

 

There are sixteen different types of personas. Would you share just a few of them? (would love to include the graphic of the 16 if it is available).

That’s correct. There is a total of 16 presentation personas. All are different and each consists of its own unique set of advantages and disadvantages. A few of my personal favorites are the Liberator, Activator, and Scholar. The Liberator is someone who is incredibly well rounded where they score high in all 4 quadrants of the Badge assessment. The Activator is your classic sales personality where this type of presenter excels in front of a room, and people love them. The Scholar is the exact opposite of the Activator where they are a verified expert and have a durable message but they may not be great in front of a room.

 

Where can I take the assessment?

Anyone can discover their presentation persona right now. They can do so by visiting Ethos3’s Badge page. The assessment takes about 10-12 minutes to complete. It’s super-fast. Also, readers should pick up a copy of What’s Your Presentation Persona? to understand their results/profile.

 

Stop One Thing

What’s a presentation stop-doing list?

Most people today are constantly trying to add items to their plate. They want to read more books, take more courses, exercise more frequently…the list goes on and on. Most presenters are no different. They are trying to do too much, and it simply is not sustainable. Instead, I would suggest instead of adding 7-8 proactive items, why not just stop one. Let’s say a presenter wants to read one presentation book a week, subscribe to 30 presentation blogs, practice 10 times before every presentation, and attend a presentation training course every quarter. That’s admirable, but it may not be doable. Why not just stop being lazy with your presentations or stop short-cutting your content development process? Stopping one thing is much easier than adding ten items.

 

Speaking Tip: stop one thing to improve your presentations.

 

What are some common presentations mistakes you’ve seen over and over?

Fuel a Lifelong Love Affair with Your Customers

The Transformational Consumer

It’s time to rethink what you sell. And your customers. Don’t forget to rethink your marketing, your competition. And, don’t forget your teams.

That’s the message from Tara-Nicholle Nelson, author of The Transformational Consumer: Fuel a Lifelong Love Affair with Customers by Helping Them Get Healthier, Wealthier and Wiser. She is the founder of Transformational Consumer Insights and the former VP of Marketing for MyFitnessPal, where she led the team that grew the platform to over 100 million customers.

 


“The best..measure of innovation is change in human behavior.” -Stuart Butterfield

 

The Growing Demographic

What are Transformational Consumers? How is this changing company strategy?

Transformational Consumers are a massive and growing group of people who see all of life as a series of projects to change their own behavior for the healthier, wealthier and wiser. They know that this behavior change will be hard, but they believe with all their hearts that it’s possible, and they believe that they can change anything about their lives if they can master their own habits and behavior.

So they are constantly on the lookout for products, services and content they think might help. They are early adopters, and they tend to have great influence on the buying behavior of the people around them.

I like to joke that if you have ever been vegan and paleo at different times in your life, you’re probably a Transformational Consumer. Most entrepreneurs are Transformational Consumers. The head of product for Airbnb once told me that they see both their hosts and their guests as Transformational Consumers.

One important takeaway here is that this is not a niche: over 50% of US adult customers we surveyed said that they use digital or real world products several times a week, or more often, in an effort to reach their healthy, wealthy, wise goals.

The power of this framework is that it offers businesses a lens through which to more powerfully understand the real-world journeys their customers are taking as they aspire to live better lives. And that shows you how to increase customer engagement, brand love, loyalty and repeat business, as well as reach new audiences. Once you understand your real-life customers’ real-world journeys, that surfaces limitless opportunities to innovate new products, features, services and even marketing messages and content that remove resistance points and trigger progress along customers’ paths.

 

Rethink Your Customer

How do companies go about rethinking their customer?

Your customers are not just the people who currently buy your product or your current social media followers. I urge companies to shift to the point of view that their customers are all the people out there who are struggling with the high-level, human problems that the company exists to solve.

Go out into the real world, do customer research, watch how people operate in real life. You can even start this process by just doing some online listening on the blogs and social media sites (not your owned channels) that your audiences frequent online (reddit, etc.).

Your goal is to understand and, ideally, visually map out your customers’ real-world journeys of going from having the problem you exist to solve to no longer having that problem. You need to know what stages they go through along their journey, what gets them stuck and unstuck, where they go to do research when they need to know or find something and what words and phrases they naturally use as they try to reach their goals.

 

 

Remove Resistance

Tell us more about resistance. How do you remove it?

Think about it: Anytime you try to level-up your life, whether it’s trying to reach a weight loss goal, to work out more, or to start a side business or meditate every day, there’s a force that pops up in all of us that Steven Pressfield and Freud both call Resistance. It’s the same force that creates procrastination, causes us to get distracted or to sabotage ourselves. It’s generally the force that makes it really, really hard to make behavior changes stick.

In your customers’ journeys toward their healthy, wealthy and wise goals, Resistance includes any sort of quit point, obstacle, friction or common point of failure. These are the things that get people stuck. There are tons of spiritual, emotional, psychological and neurological root causes of Resistance, but suffice it to say that people often know what changes they need to make; they just find it very difficult to actually make them.
This creates a major opportunity for companies to win the love of the people they serve by focusing on removing Resistance.

You can remove Resistance from your customers’ journeys by creating features and products that take friction out of their path, by reducing the difficulty or cost or number of brain cycles they have to go through to create the habits or changes they want, or by inserting progress triggers into their real-world journey.

For example, at MyFitnessPal, we learned during customer research that one of the biggest obstacles (points of Resistance) that people experience along their journey from living an unhealthy life to living a healthy one is the cost of eating healthy food and the difficulty and time involved in cooking healthfully. So every team in the company explored how they might help remove those Resistance points. When it came to content, for example, we created all sorts of recipes and meal plans for feeding a family healthy, home-cooked food on the same budget we learned people were spending on a fast food family dinner ($20). We also created all sorts of video, recipe and meal-planning content to reduce the time and increase the ease and deliciousness of our customers’ home cooked meals.

 


“If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out all right.” -Jeff Bezos

 

Rethink the Competition

How and Why You Should Become a Mentor

The Power of Mentorship

 

Giving back.

There’s one aspect of servant leadership that is most important: helping people work on their lives, not just their jobs.

Becoming a mentor is one way that professionals can give back.

 


“A mentor is someone who allows you to see the hope inside yourself.” -Oprah

 

Patty Alper’s passion is mentoring. She is president of the Alper Portfolio Group, a marketing and consulting company, and is a board member of both the Network for Teaching Entrepreneurship (NFTE) and US2020, the White House initiative to build mentorship in STEM careers. Her new book, Teach to Work: How a Mentor, a Mentee, and a Project Can Close the Skills Gap in America, provides a compelling argument for starting mentor programs in organizations and communities around the world.

 

The Joy of Mentoring

Mentoring is your passion. What are a few lessons that you’ve learned from your work mentoring so many inner city high school students?

I’ve learned that the impact you can have on students can be even greater than you ever imagined. And it is wonderful. Consider this: so often these youth have absolutely no connection to successful, professional adults. When you mentor, you become their ambassador to a future world of commerce, which is often remote, complex, scary and seemingly unattainable.  I have found an intergenerational connection forms particularly when you share your own life trajectory.  And not the cocktail-party jargon about Mr. Success either, but more the vulnerable mishaps and the bumps and turns along the way.  When you piece together life’s uncertainties with strategies that turn out well, you offer kids a truly relatable journey. It’s as if you have said, subliminally, “If I can, YOU can.”

When you enter into mentorship, you do so blindly.  You enter without a return-on-investment in mind but simply a prospect for potential. This phenomenal exchange can result in an unanticipated “light bulb” moment.  What I’ve learned is that you might actually set a ripple in motion.  After 1500 student letters I’ve received over the course of 15 years of mentoring, I’m witness to a mentor’s impact that is unforeseen.  Students, who look like they are not even listening or engaged, write to proclaim gratitude for an obscure detail you thought went unnoticed. Indeed, some mentees have stayed in touch and are young adults now— in their thirties—who have become entrepreneurs, educators, fashionistas, or preachers. Interestingly, the highest compliment of all is that they, too, are paying it forward. What I’ve learned is that you cannot forecast the genuine awe that occurs when you help another and the crescendo of that ripple effect.

 


“Every great achiever is inspired by a great mentor.” -Lailah Gifty Akita

 

What are a few of the benefits of corporate mentoring with students?

The difficulty with answering this question is keeping it to a “few.” Starting with the mentor, the benefits include the connections and friendships you make. You meet incredible, knowledge-craving students who will cherish every day that you make time for them. Also, you get to know your fellow employees, from senior management to administration, in a wholly new, shared experience of giving back. These positive experiences are brought back to the workplace and ultimately impact the culture.

Indeed, one of the benefits of offering corporate mentorship is that millennials prefer to work for a company with a robust corporate social responsibility program.  Therefore, more qualified employees will seek jobs there. I believe they want to engage in good works activities that they might not be able to find or fund of their own volition. Employees feel a greater sense of loyalty to a company that isn’t solely profit driven but is a “company with a soul.”

Lastly, the employees find a unique way in which they can serve their company by sharing their professional knowledge as ambassadors in the community. Will those mentees go home and tell their parents about you and the company you work for? You bet. Will the school remember the corporation when it comes time to send their finest students for potential employment? Absolutely. And will an employee find like-minded people within the corporation who will all want to build on the mentoring connection you have? Almost immediately.

 


“Millennials prefer to work for a company with a robust corporate social responsibility program.” -Patty Alper

 

Watch Your Employees Benefit from Mentoring

You talk about the link between employee retention and mentoring. Would you share your perspective?

As Rick Luftglass, former director of The Pfizer Foundation’s education volunteer programs, said when I interviewed him for the book, “Employees want to be part of something that is bigger than a company.  The business culture is internally based, but the philanthropy is external. That volunteer ethos provides something more than a quarterly return on earnings…it stretches employees beyond their day-to-day job. “

Mentoring boosts employee retention in a myriad of ways. The employees who mentor become the public face of their company. They take pride in this important role of bridging corporate relationships within the communities where they reside. As well, they enjoy an enriched experience that is brought back to the business culture. A sense of gratitude and loyalty evolves toward the company that provided this opportunity. All of these factors lead to greater employee happiness, more significant social connections, and greater satisfaction with the company overall.

 


“Mentoring boosts employee retention.” -Patty Alper

 

Build a Successful Mentorship Program