The Innovators Studio with Phil McKinney

When I look back over my career and reflect about all of the people I’ve crossed paths with such as former bosses, former team members and former members of my innovation teams — the one of the key characteristics was breadth and depth of the “diversity”. Now you may be thinking I’m talking about the HR definition of diversity. In this case, I’m talking about much more.

One of the challenges for an innovation leader is to get his team to share their opinions, inputs and ideas so that they can be considered. However, most leaders hire people like themselves. Same education. Same economic background. Same interests. Same biases. To break that trend and to create more productive teams, leaders need to break the habit of hiring people “like us”.

So what are the different “traits” of diversity that you should recruit for?

* Gender

* Ethnicity

* Age – Avoid what is becoming the Silicon Valley boas against anyone older than 35.

* Education – Do they really need a college degree?

* Relevant Experience – Mix long experience with no experience

* Economic upbringing – Did you come from a family with money? Hire someone who didn’t come from money.

* Nationality

* Hobbies/interests outside of the job – Look for the closet creative such as a musician or photographer.

* Introvert and extrovert

All of these traits have an impact on how you look at ideas and innovations . The better teams have as diverse a team as possible so that views, opinions and biases are all put on the table when discussing a new idea.

If you avoid diversity, the “homogeneous” team will look at a new idea through a very narrow lens and view themselves as a proxy for the customer.

Guest: Tara Roehl – Speech Language Pathologist on Neural Diversity

Tara Roehl is a nationally certified speech-language pathologist. She owns Speechy Keen Speech Therapy, a telepractice-based private practice in Colorado focusing on the social/pragmatic and executive functioning needs of students with ADHD, High Functioning Autism and related disorders. She speaks across the nation at national and state conventions, medical conferences and local groups for parents and professionals. Her topics include executive functioning, telepractice therapy interventions and the integration of the iPad with gamification theory in therapy.

Topic: Neural Diversity (sometimes referred to as Neurodiversity) describes those in the population who have a different thinking process than those who are neurotypical. By using a diversity hiring effort around the way people think, an organization can greatly improve their creative and innovation output and impact.

Killer Question/Mind Hack

What is surprisingly inconvenient about my product??

The designers and engineers who worked at HP face many challenges in getting their ideas signed off on. It’s a long process from an idea to a finished prototype. Before any product can hit the market, it faces one final test. I take the prototype home, give it to my wife, and say, “Tell me what you think.” Now, my wife is an extremely smart and focused individual, but she is emphatically not a techie. She doesn’t care how a gadget works; she just wants it to work.

Her lack of specialized knowledge has been hugely valuable to me over the years. If I test a new product, I can troubleshoot it almost without thinking. I might not even notice a glitch that could cause major hassles for an end consumer because the fix is second-nature to me. On the other hand, if my wife can’t get a product to work, the first thing she does is call me up and yell at me, which is a great incentive to get our products as flawless as possible.

It is always the start that requires the greatest effort. ~ J.C. Penney

Many believe we are facing one of our largest and most important challenges – the education system. We are transitioning from an information and knowledge economy to that of the creative and innovation economy which requires a different skill set. Many are attacking the problem but is it enough?

Sir Ken Robinson’s book, “Creative School” focuses on how to transform the nation’s troubled educational system.

Guest: Paul Zane Pilzer

Paul is an American economist, New York Times best-selling author, and social entrepreneur. He has written 11 books and is the founder of six companies, and has been profiled in more than 100 publications including on the front page of The Wall Street Journal.

His latest business is Zaniac – a place where kids K through 8 come to dig deeper in to STEM (science, technology, engineering and math). Some refer to it as Disneyland for geeks. The results for the kids who attend are impressive.

Contact Paul Zane Pilzer at his website.

Killer Question/Mind Hack

What are the unanticipated uses of my product??

Not all interesting discoveries have an obvious application. If you believe you have something, but you’re not sure what exactly it’s going to be good for, don’t give up.

Many innovations languished in labs for years until they were matched to a product. Such as:

* Silly Putty was invented during WWII as a failed experiment when trying to find a replacement for rubber.

* Teflon was invented in 1938, but it didn’t coat its first pan till 1954.

* The Post-it note was built on the back of some not-very-good glue. Its inventor believed it might have value but it took him five years to get any support for the concept, or find a potentially profitable use for it.

* HP had a breakthrough with a super-accurate thermometer that was created in the HP Labs. Despite its accuracy, there was no clear use for the device until it was used to measure fluctuations in ocean temperature. The resulting data is a key component in ongoing discoveries about the rising temperatures in the oceans.

If an idea is new, interesting, and has unique properties, you will find a use for it, along with customers who will want to buy the end product. Have patience; it can take a while before the customer need emerges.

So ask yourself …

* Do you have customers who can benefit from the unanticipated uses of a product? How could you identify a potential group of such customers?

* What’s the most unusual way you’ve ever seen your product utilized?

* How could you encourage other users to find out about the unanticipated uses of your products or services?

“You were born to win, but to be a winner, you must plan to win, prepare to win, and expect to win.” ~ Zig Zigler

Some believe that innovation is not something that you can manage much less measure. I don’t agree. Over the years, those of us in the innovation space have been looking for ways to understand the impact of our decisions on our respective organizations.

Guest: Steven Vannelli, Managing Director of GaveKal Capital

He oversees index creation. investment strategy, asset allocation, security selection and management of the investment team. His work is the core of GaveKal’s proprietary security selection models and indexes which are based on a novel approach to accounting for intangible capital.

Contact: GaveKal Capital website

Main points …

* There exists anomaly in the stock markets whereby companies successfully implementing an innovation strategy, over time, experience excess stock returns. In other words, companies employing an innovation strategy consistently exceed investors’ expectations and this is reflected in the stock price.

* Current accounting standards are an antiquated framework for evaluating highly innovative companies. They were developed in an industrial era where companies accumulated capital by buying it from other people.

* Highly innovative companies build their own capital, and that activity is poorly captured in current accounting conventions.

* Since 1974, the governing accounting body (FASB) has mandated that companies expense knowledge investments. This is ironic given this was 3 years after Intel released the 4004, the first commercially available semiconductor, launching us into the digital age.

* Accounting standards are a medium of communication between a company and its shareholders. When they distort or eliminate information relevant to investors, investors can make mistakes, resulting in highly innovative companies experiencing a potentially higher cost of capital and reduced access to capital.

* Evidence suggests that companies that choose to pursue an innovation strategy—rather than a mimicking strategy—experience more rapid sales growth, greater market share growth, less earnings variability, less stock price variability and greater long-term capital gains.

What’s the history of research in this space?

* Baruch Lev began the body of research in 1993 by questioning the validity of the FASB decision compelling companies to expense innovation spending. By 2005, he offered the idea that all innovation spending wasn’t the same and some companies pursue and innovation strategy while other follow a mimicking strategy.

* While others may recognize the accounting conflict, we are the only firm that has a proprietary model to incorporate corporate knowledge investments into an accounting framework.

* We use this accounting framework and some basic screening criteria to identify the companies in the global developed and emerging stock market that are successfully employing an innovation strategy.

What’s the time window for this increased performance?

* The academic literature suggests that there is a five year window of time after knowledge investments are made where companies experience excess returns.

Which companies make the cut and which do not?

* We use our knowledge adjusted framework here. We begin by transforming the financial history of over 3,000 companies into a knowledge-adjusted financial history.

* Next we apply a set of screening criteria focusing on a few types of variables. We are looking for companies that invest at least 5% of sale in intellectual property and where at least 5% of their assets are represented by intellectual property. We also consider profit margins, profitability and financial leverage.