Inventors
Willis Haviland Carrier was granted a US patent for an 'apparatus for treating air' in 1906 and so began a lifetime of creating airconditioners for industrial, then workplace, then residential use. Former prime minister of Singapore Lee Kwan Yew (who likes to live life at 22° Celsius) says the airconditioner is one of mankind's great inventions, giving his country quantum productivity gains. Gerhard Vorster, Deloitte Consulting managing partner and leader of the firm's gung ho innovation program, also cites Carrier as an inspiration. 'Carrier took adverse circumstances and created an environment that is very productive,' he says.
Inventors are different from us. 'They are nuts,' says Mark Pesce, who is a regular judge on ABC1 program The New Inventors as well as an inventor, writer, lecturer, virtual reality pioneer and engineer. 'You have to be so in love with what you are doing that don't see it as a sacrifice but your children, spouse and bank account will.' Pesce cites 2007 The New Inventors grand final winner Don Morgan as a case in point. It took 20 years to see his idea for the cone-head motorcycle helmet come to fruition, but it was worth it in the end. This invention is not just commercially viable, it is a potential lifesaver.
In his private consulting firm FutureSt, Pesce works with a range of private, public and non-profit organisations to encourage new ideas and innovation. Pesce uses a carrot-and-stick approach to help managers to embrace fresh ideas and invent new ways of working. 'The carrot is that innovation empowers everyone,' he says. 'It can help governments get re-elected, non-profits can raise the money they need, and there are clear outcomes. The stick is that resisting it can mean becoming irrelevant, not being re-elected or losing business.'
Pesce cites Macquarie Bank as an example of a company that has made financial innovation a part of its culture. Its evolution from a three-man British merchant bank to a staff of 65,000 with annual profit growth of 28 per cent since 1996 has been driven by staff who have been given the resources to develop new streams of business such as investment in infrastructure, retail funds, private equity and wealth management.
The economist recently described the bank as the entrepreneur factory 'that lets its employees run with good ideas' and awards them hefty bonuses when they succeed. Through an in-depth and continuous conversation with various stakeholders Pesce believes they can become the best supporters of new ideas, a powerful sales force for the need to change and innovate.
Deloitte Consulting has been a victim of what is referred to as 'disruptive innovation', a term created by influential Harvard Business School economist Clayton Christensen in his book The Innovator's Dilemma: When New Technology Causes Great Firms to Fail (Harvard Business School Press, 1997). In 2002, Deloitte Consulting was operating with more than 1300 consultants when the outsourcing phenomenon (to countries such as India) hit the business. Though outsourcing had been around for 20 years, Deloitte did not anticipate that new competitors would offer its clients similar solutions as Deloitte was providing, but at one-third of the cost.
'It literally happened overnight,' says Deloitte Consulting's Vorster. Deloitte Consulting almost disappeared down to only 200 staff. The business has slowly regenerated, with staff numbers up to 600 thanks to a new business model. 'Nobody is more aware of the need to innovate than those that have been disrupted,' says Vorster.
A key part of Vorster's role as Deloitte's innovation champion is to cultivate the flow of ideas through the organisation. It is not a fuzzy, feel-good exercise. Deloitte wants 50 per cent of its revenue growth to come from'areas we don't have now', says Vorster, who is also involved in innovation think tanks both in Australia and offshore.
'Innovation is hard work,' he says. But the company needs to make the effort because these new ideas could become a source of competitive advantage. The approach is systematic. It is about looking at business needs and helping staff, clients and suppliers to think in new ways. All staff can contribute ideas to the Innovation Zone. These ideas are assessed every fortnight, weak ideas quickly weeded out (known as 'fast failing') and those ideas with potential can be developed with resources from a specific innovation fund.
Professor Veena Sahajwalla likes to talk about 'radical ideas' that can have breakthrough results. She is undertaking groundbreaking research into the development of 'green steel' at the University of New South Wales' Centre for Sustainable Materials Research and Technology. Sahajwalla also finds time to be a judge on The New Inventors. She has a theory about where radical ideas come from. 'People who love what they do and are passionate about what they do, these are the people who come up with radical ideas,' she says. 'Listen to these ideas and find support for these ideas.'
She pays homage to scientific researchers Barry Marshall and Robin Warren. The team discovered the Helicobacter pylori bacterium that causes stomach ulcers and gastritis in 1982. Establishment doctors and scientists, who did not believe that bacteria could live in the acidic stomach, ridiculed them. They received the Nobel Prize in 2005. Marshall has been quoted as saying that 'everyone was against me but I knew I was right'.
In a business climate of 'innovate or perish' there is an urgency for organisations to harness true, original thinking and ideas to survive. Companies such as Google, 3M, Apple and Nokia are textbook examples of how embracing and investing in innovation, despite the risks, can blow competitors out of the water and create new billion-dollar streams of revenue. Nokia used to manufacture gumboots before it switched to mobile phones. Even pop queen Madonna is an innovation pin-up. For the past 25 years, reinvention has been her middle name, something her fans are happy about.
The whole process of harvesting ideas and developing those with potential within an organisation is made all the more challenging by the fact that inventing new products and services is an uncertain and risky business with a high degree of failure. 'Nine out of 10 attempts at innovation fail,' says Mark Dodgson, director of the Technology and Innovation Management Centre, the University of Queensland Business School.
The bulk of returns come from that one idea out of 10. This risk is what makes it so hard for many organisations to encourage new ideas. This investment in research and development is seen as a cost especially in businesses where these costs come straight out of the pockets of partners in the business.
Dodgson is the author of international bestseller on innovation Think Play Do: Innovation, Technology and Organisation (Oxford University Press, 2005). He has a directorship in London-based innovation consultancy Think Play Do Group, which works with clients including British Telecom. Dodgson has been at the forefront of innovation research for 25 years, and has been instrumental in the University of Queensland's development of Australia's first MBA centred on innovation. 'We made a decision innovation was crucial, so it should be a central plank of what we teach,' he says. Managers can learn to manage ideas by understanding the principles of innovation.
'It is a process,' says Dodgson. 'It is integrating all the various parts of the organisation, communicating across functions, understanding what the process will end up delivering. It's about customers, about merging markets and technological opportunities.' The innovation MBA follows on from shorter innovation courses at UQ that have attracted more than 2500 students.
A key part of managing innovation is assessing the unique situation of each business and identifying possibilities for development. Simon Baker, chief executive of the $650 million REA Group, which operates Australia's number-one real estate website, realestate.com.au, is always under pressure to boost revenues, control costs and keep his stakeholders happy. Much of his time is spent at 37,000 feet overseeing a string of new acquisitions around the world.
A typical week in May included starting out with Monday in Luxembourg then on to Brussels, Treviso, Milan, New York, Hong Kong, Singapore and back to Melbourne on Saturday. Not much time for new ideas? Well Baker makes time, aware of the need to develop new products and services 'so we don't stand still'. His computer coders, mainly based in New Delhi, continually work on new ideas for his sales, marketing and customer management teams, new ways of sharing resources between different parts of the business, driving traffic to partner sites and harnessing technology. They are also given a day each fortnight to experiment with new ideas, and half-yearly ideas presentations are held. 'It allows the tech guys to show off,' says Baker. One such experiment has reaped significant rewards.
The REA Group has been named an official honouree for a Webby award (the internet's answers to the Oscars) for its website property.com.au, a new platform for real estate search that was quietly launched a year ago. The 'experiment', says Baker, could not cost very much 'or people get nervous'. The site uses the existing database for Realestate.com.au, so it was produced at a relatively low cost ('a few hundred thousand dollars') by teams in Melbourne, Luxembourg and New Delhi, with the Indian team pulling the site together.
There was no big idea, 'more a case of when we looked around at what was happening, we thought, "How do we play with this?"' Baker is a believer in sheer enthusiasm to get ideas going but he is careful to keep a balance between innovation and what he calls 'business as usual'. He does not want to get too caught up in new ideas and veering off in all sorts of directions.
In this age of innovation, the most successful companies are the ones that see themselves as innovators. This is a mighty challenge for most organisations. Many still misinterpret innovation as something that only happens in a test tube. Ideas need to be bubbling up from all parts of the organisation, up and down, sideways and back to front. 'Innovation is the consequence of hard work,' Vorster says.
Leading physician, inventor, consultant and author Edward de Bono believes that creative thinking can be taught and learnt. Ten years after Christensen coined the term 'disruptive innovation' he is confident that the innovation process is being demystified. He told The Economist, 'There isn't a cookbook yet, but we are getting there.'
Groundbreaking inventions
Light bulb
Electric light was a group effort, but it was the master inventor Thomas Edison who came up with the long-lasting bulb, taking electricity mainstream.
Screwpump
When Archimedes leapt out of the bath shouting 'eureka' sometime in the 3rd century BC, he had come up with a principle of water displacement, which led to a way of transferring water from a low-lying body of water into irrigation ditches. This screwpump is still used today.
Mobile phone
Captain Kirk in Star Trek was the inspiration behind the mobile phone. Engineer Martin Cooper observed the captain talking on his communicator and imagined he could come up with something similar.
Computer
Alan Turing is acknowledged as the godfather of computer science. His Manchester Mark 1 was one of the first computers. Later Vannevar Bush created the first analogue computer to solve complex equations. In creating the microchip, Jack Kilby turned room-sized computers into desktops.
Paper
Around AD 105, Cai Lun, a eunuch of the Chinese Imperial Court, pressed bamboo and bark thinly to create paper.
Penicillin
Alexander Fleming may have been the one to notice a fungus inhibiting growth in his bacterial cultures, but Australian Howard Florey developed a method of making penicillin available in enough quantities to save millions of lives.
Post-it note
Spencer Silver was the one to come up with unsticky glue, but Arthur Fry came up with its use.
Kevlar
Five times stronger than steel, Kevlar is used in bridge cables, bicycle tyres and bullet-proof vests. DuPont scientist Stephanie Kwolek stumbled on it by accident while running experiments.
Helicopter
Can be traced to original designs by Leonardo Da Vinci, but it was not until 1942 that a helicopter designed by Igor Sikorsky reached full-scale production.
Microwave oven
While he was standing in front of a microwave tube, US engineer Percy Spencer observed that the chocolate bar in his pocket melted. He then tested the concept on popcorn and, hey presto, the microwave oven was born.
Internet
The internet was only for scientists and geeks until British scientist Tim Berners-Lee brought cyberspace to the people when he saw the relationship between hypertext and the internet and created the worldwide web.
Further information
Referece: July 2008, volume 78:06, p. 26 - 29
