Wednesday, 15 November 2017

The 12 Preconditions for Innovation Success - 2

Innovation is something new for many Australian companies reared on a diet of ‘build to print’ and tiny portions of genuine opportunity. The word itself engenders suspicion: is it a ‘buzz word’? A fashionable pre-occupation? It’s certainly not widely understood.

Regardless, Australia’s defence industry needs to understand and master the process of innovation. In a previous post I looked at innovation from the point of view of the defence customer; this post addresses innovation from industry’s point of view.

If the customer is being truly innovative this has significant implications for his industry and supply base: defence companies will be exposed to the operational and technological needs of defence forces and the global prime contractors in a way they’ve never experienced before. To survive, to flourish, they must become innovators too.

For anybody who thinks the defence industry is special, by the way, I have news: it’s not. The defence market is special and unique, but the defence industry is like any other high-tech industrial market for capital goods and services. The good news is that that factors that make a non-defence company a successful innovator apply also to defence companies, so there’s plenty of supporting literature and no black magic involved. Of course, every project is different, some subtly, some quite significantly, but for the majority it emerges that there are common pre-conditions for innovation success. They’re quite independent of a specific project – they’re more generic and they go to the intrinsic attributes and routine behaviours of the organisations involved.

Boiled down to their essentials, this is what I believe they are - and none of them are surprising or counter-intuitive:

  1. Appoint a company leader who’s open to constructive change and keen to innovate
  2. Organise yourself to innovate: an organic (as opposed to a mechanistic) structure enables and encourages cross-functional communications as well as creating conditions for lateral thinking and idea generation (if necessary, create such a group within your organisation)
  3. Work towards technical mastery of the domain in which you’re operating: the products, the technology they embody and the technology and expertise required to build them
  4. Be pro-active in dealing with your customer – both determining his needs and sensitivities, and testing ideas and hypotheses on him (In Australia this means the ADF, DST and the bureaucracy)
  5. Invest in your R&D and prototyping capabilities
  6. Conduct R&D systematically, guided by your market knowledge (see 8, 9 and 10 below)
  7. Be open to external partnerships and sources of technology and IP
  8. Understand the market in which you’re operating: who the players are (customers as well as rivals, and even suppliers and sub-contractors); why they’re in the market; what’s happening with technology; what else is going to shape the size and behaviour of the market in the future?
  9. Understand your market position and what (if anything) you need, or intend, to do about it
  10. Be systematic in your marketing activities (which includes encouraging lateral thinkers and good ideas!)
  11. Create a cross-functional team to integrate market and technical knowledge and then develop and deliver the project
  12. Appoint a leader of this team who has REAL authority to drive the project along

Once defence companies understand that their industry sector isn’t that different, they can then look at their structures, intrinsic attributes and behaviours, and then start to apply some of the lessons you’ll find in books by a swag of authors who’ve studied innovation success in depth: people like Amantha Imber, Roy Rothwell, Jeff Dyer, Nathan Furr, Clayton Christensen and Steven Johnson (Google them); and there are others.

Defence companies can learn a lot that’ll help them on their journey, and it’s now a journey with a better-defined destination. The Defence Industry Capability Plan and Defence Exports Strategy may provide better directions, but from where I'm standing, close to the start line, you will still only get there by embracing the challenges of the innovation process.

Monday, 13 November 2017

The 12 Pre-Conditions for Innovation Success – 1: the Customer

Why is innovation important in the defence market? Because a small country deploying a small defence force won’t derive either an operational or economic advantage doing the same thing as everybody else, only cheaper. Innovation – in equipment, organisation and process - is the difference between being ordinary (possibly irrelevant) and vulnerable, on the one hand, and strong, resilient and prosperous on the other.

Defence is a monopsony market. That means the defence customer has a significant shaping effect on the market: its size, its behaviour and the barriers to entry. If he is the launch (and possibly sole) customer for a new piece of equipment, or service, then its success depends to a significant degree on how he addresses both the operational need and the opportunity to be innovative in meeting it. It also depends on the partners and suppliers he chooses to deliver this new capability – and making a wise choice is a pre-condition (one of many) for innovation success.

So what are the pre-conditions for innovation success that the defence customer needs to satisfy? There are a dozen, in my view, and they need to shape key attributes and behaviours on the part of Defence and the ADF. Boiled down to their essentials, this is what I think they are:

1    1.   Nurture and grow your technical expertise
2.   Nurture and grow your professional expertise
3.     Maintain your situational awareness: keep abreast of emerging threats as well as emerging technologies and their potential effects on your own capabilities and operations
4.     Understand your needs and articulate them properly
5.     Be methodical in conducting R&D and capability development: this will help you understand your needs, as well as helping you identify solutions
6.     Seek opportunities for innovation in your organisational practices, processes and procedures as well as in your equipment inventory (innovation in the latter is usually wasted without innovation in the former as well)
7.     Take every opportunity to engage with and inform your industry and research base – the more they know about what you do, how you do it and what difficulties you face (within obvious limits!), the better able they are to support you – see Israel as an example
8.     If it needs to be done at all, do it quickly. Urgency eliminates irrelevancy: a short deadline ensures a focus on the outcome, not the process
9.     Establish a disciplined acquisition strategy that both reflects the urgency of the need and tolerates sensible risks (see 1 and 2 above) and remember that obsessive risk-aversion is itself another source of risk
10.  Appoint a champion with sufficient seniority to drive the project forward in spite of bureaucratic obstacles – or to kill it, if this turns out to be the correct course of action; and give him or her the best possible project team
11.  Make sure you’re nurturing your industry base – In a technology driven monopsony a smart customer doesn’t allow his industry base to fall into a technical rut or to fall behind in a technology sense. 
12.  Nurture a culture and capacity to work with your industry base to identify opportunities and develop solutions, both for yourself and also, potentially, for allies and export customers.

Defence – the ADF, CASG and DST - is mobilising itself to satisfy these pre-conditions. The 2016 Defence White Paper and Defence Industry Policy Statement kick-started the change process. But to continue satisfying the pre-conditions for innovation and operational advantage in both Industry and Defence we need to see the emerging cultural changes embedded permanently in the ADF and in Defence’s capability development and acquisition processes. The early signs are very promising – but these are unsettled times: Defence and Industry together need to make these changes future-proof.