This is a post I’ve been meaning to write for ages, but Neil McIntosh’s post about the closure of The Economist‘s skunk works, Project Red Stripe, has finally prodded me into action.

Project Red Stripe was a small team of six Economist employees who were given £100,000 and asked to “develop something that is innovative and web-based and bring it to market” within six months. They brought in outside experts to talk to the group and solicited ideas, from Economist readers and the wider blogosphere, which they then “evaluate[d …] against a set of criteria that the Project Red Stripe team have predetermined”.

Unfortunately, the idea that they came up with wasn’t really one that The Economist could see a way to earn any money out of. Project Lughenjo was described as:

[A] web service that harnesses the collective intelligence of The Economist Group’s community, enabling them to contribute their skills and knowledge to international and local development organisations. These business minds will help find solutions to the world’s most important development problems.

It will be a global platform that helps to offset the brain drain, by making expertise flow back into the developing world. We’ve codenamed the service “Lughenjo”, an Tuvetan word meaning gift.

Announced only four weeks ago, it has now had the plug pulled.

Neil, in his response to this turn of events, rightly questions whether ‘profitable’ is the only definition of success, and points out that innovation isn’t always radical and that a single innovation’s success can be, instead of based on it’s own performance in isolation, a result of its position within a group of innovative components that are profitable only in the aggregate. He says:

The lessons for news organisations? We needn’t make innovation hard by insisting the end product is always huge and/or high-profile. We shouldn’t think that innovation is something that can be outsourced, either to a small team or to a software vendor (the latter being a surprisingly popular choice for many newspaper publishers).

And we needn’t necessarily worry that we’re not having enough ideas. If you ask around, you’ll probably find it’s not ideas we’re lacking. What’s tricky (I know – this is my job) is capturing the best ideas, mapping them to strategic goals, and delivering them in a way that makes them successful.

To do that, you need innovators who understand the importance of baby steps and can deliver them, one after the other, regular as clockwork. And, unlike Red Stripe, you can make their life easier by making sure they’re not locked away from the rest of the business, worrying about a blank sheet of paper and a mighty expectation from the mother ship that, somehow, they’ll be able to see the future from there.

Neil also links to Jeff Jarvis, who says:

[T]hey ended up, I think, not so much with a business but with a way to improve the world. Their idea, “Lughenjo,” was described in PaidContent as “a community connecting Economist with non-governmental organizations needing help – ‘a Facebook for the Economist Group’s audience.’ ” It wasn’t intended to be fully altruistic; they thought there was a business here in advertising to these people, maybe. But still, it was about helping the world. And therein lies the danger.

I saw this same phenomenon in action when, as a dry run for my entrepreneurial course, I asked my students at the end of last term what they would do with a few million dollars to create something new in journalism. Many of them came up with ways to improve the world: giving away PCs to the other side of the digital divide, for example. Fine. But then the money’s gone and there’s not a new journalist product to carry on.

This gives me hope for the essential character of mankind: Give smart people play money and they’ll use it to improve the lots of others. Mind you, I’m all for improving the world. We all should give it a try.

But we also need to improve the lot of journalism. And one crucial way we’re going to do that is to create new, successful, ongoing businesses that maintain and grow journalism. We need profit to do that.

A very good point. Altruism isn’t really what’s needed, and it doesn’t necessarily equate to innovation (although in rare cases, it does – think of the $100 laptop project).

It’s not just newspapers
One thing that’s really important is to remember that the problems that The Economist have with innovation also face many other businesses in many different sectors. I see, for example, the PR industry just storing up trouble, the way that they have segmented themselves in to different agency types such as creative, print, TV, or online. I don’t think that any company can afford to segment its PR and marketing like that, let alone an entire industry. How can the situation where your creative team is separate from your online team – and those teams are run by different companies – be a good way to keep abreast of technology, to understand and grasp the opportunities? If a creative agency has an idea for online, how will they be able to implement it if online is run by someone else who is actually in competition. Now, maybe I’m misunderstanding the way that the PR world works, but that’s how it looks to me on the outside: like built-in failure.

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Frankly, I think the problem is that businesses across the board thing that technology and innovation and the internet are things that other people do. And whilst that’s the case, those businesses will not be making the most of the opportunities that are opening up online right now. They will instead wait until someone else successfully implements an idea that they can copy. It’s the great race to be second.

What does innovation look like?
I decided not to try and answer the question, “What is innovation?” because I really don’t think that’s a useful question to ask. Innovation is lots of things, and we all assume we will know it when we see it. But is that really true? I don’t think so. Instead, we fall into the trap of building up an expectation of what innovation looks like, then searching for things that resemble that picture and ignoring anything that doesn’t.

The popular romantic image of innovation is that it’s the really big idea that came from nowhere and makes your jaw drop in astonishment. It’s that “Oh my god, why didn’t I think of that?” moment. It’s the idea created in the forges of your imagination that springs forth, fully formed and ready to go.

Bollocks is it. This whole myth of innovation is tied to the myth of creation, (no, not that myth of Creation, with discs on the backs of elephants on the carapace of the Great A’tuin), the idea of the blank sheet, the author-as-god, and the concept of originality. The myth that you just sit down in a quiet place with your pen poised and your Moleskine at the ready and it all just comes to you in a divine flash of inspiration. God knows how many poor sods have been tortured by this myth only to find out that creating things doesn’t work like that at all.

Innovation, like all other forms of creativity, never comes out of nowhere; it comes out of all that’s been before. All the things you’ve read, conversations you’ve had, scenes you’ve witnessed, and – most importantly – all the work other people have done. Creation requires giants upon whose shoulders we can stand; we cannot do it in a vacuum. Indeed, sitting down with a clean sheet of paper, trying to conjure a killer idea out of nowhere is only going to end in tears, mainly of frustration.

When it comes to technical innovation, any developer worth his or her salt will tell you that the best way to come up with a wining idea is to think about a problem that irks you and that you want to solve: Something that you’re passionate about, that really gets you fired up. Joshua Schachter, who created social bookmarking site Del.icio.us, is a well known example of this. Ian Katz wrote in The Guardian last year:

Like several Web 2.0 success stories, Del.icio.us began life as the elegant solution to a problem encountered by its creator. Joshua Schachter was working as an analyst in a Wall Street bank and writing a blog in his spare time. He got sent so many web links that he created a database to keep them in, then a web page to access it.

At first Schachter tagged all the links himself with the subjects they touched on, like a manic filing clerk. But when he allowed users of the site to tag their own links, Schachter began a trend that has become one of the central themes of the new web.

If you don’t experience the problem you are solving, you are unlikely to solve it in an innovative way. Locking six people up in a room for six months with £100,000 isn’t giving them much of an opportunity to experience problems.

How big is innovation?
Seems like a stupid question, but I think it’s an important one, so let me be clear. The size of your innovation does not matter. What matters is whether it works. Really big ideas can end up being impractical, and small ideas or tweaks of existing ideas are easier to implement and often bear more fruit.

One could argue that Google’s Adsense was really just a tweak of an existing model, adding in relevance to the ad serving equation. Equally, Craigslist wasn’t a particularly big paradigm shift, it just took classifieds and put them online. The innovations of “What if we make the ads relevant?” and “What if we put these ads online?” aren’t really huge, groundbreaking ideas, but they were disruptive and they have been very successful because both solved problems. AdSense solved a problem for small web site owners wanting revenue from adverts on their site. Craigslist gave people an easy and free place to post classified.

There’s a reason we still don’t have personal jetpacks and floating homes. They were great ideas 50 years ago, but they turned out not to be very practical, nor did they really solve a problem.

Does it have to be brand, spanking new?
Not only is there a myth of originality, there’s also a myth that originality matters. As I’ve said, nothing is really original – everything comes from something else. Innovation is looking at things differently, or putting two things together in a different way, or stumbling across something interesting. But it doesn’t necessarily have to be new or original.

Sometimes, it just doesn’t matter that someone’s had the same idea, what matters is that you can do it better. Just because someone’s already invented the mousetrap doesn’t mean that there aren’t improvements to be made. People do want humane mousetraps or ones that catch multiple mice. Indeed, Google itself became successful through constantly improving a mousetrap that someone else invented – search.

Who innovates?
I think it’s quite hard to predict who’s going to be innovative – sometimes, it’s not the people who think they are innovative. But the best innovators I know do have one thing in common – they are all at the coal face, facing problems every day and spending time thinking about how to solve those problems. They are steeped in technology. They eat, drink and sleep it. They understand what it can do, what it can’t do, and what it could do. They understand what is possible. This is absolutely essential for innovation – there’s no point having an idea if your idea isn’t actually technically feasible.

I remember being in one meeting with a client, who was talking about getting into Second Life. They hadn’t really spent much, if any, time inside Second Life, and they didn’t really know what was possible, yet they felt that it would be a valuable place for them to create a presence. I have no argument with that decision, but their first idea was “We’ll create a pet shop and give away dogs”. It’s a nice idea, but there’s one major problem with it – Second Life has no four-legged walking algorithm, so to make a dog move you’d have to nail it to a skateboard or make it levitate. People who don’t understand the medium or the technology with which they are trying to work find it hard to have workable innovative ideas.

And within a business, innovation doesn’t always come from where you think it might. I’ve met people in IT who couldn’t innovate their way out of a wet paper bag and junior staff who are just bursting with ideas. One thing you can’t do is designate innovators and say “This is where our innovation is coming from!”

A culture of innovation
You don’t need a skunk works to be innovative, you need a culture of innovation. It’s very tempting to create a separate team with their own budget and resources, free of bureaucracy and red tape, to whom you can give the task of innovation and then forget about. “We don’t need to think about this innovation malarky – Jones has got it all under control.”

The problem is that it’s very difficult to do a really good skunk works project. You need the right people – and lots of them – in the right environment, at the right time, with the right sort of budget… and you need it to fund it long term. Six months is nothing. You could barely get up to speed on what’s going on in six months, let alone come up with something worth having. My opinion is that the skunk works era is dead. Maybe I’m being melodramatic, but I think the hayday of Bell Labs, Xerox PARC, Lockheed‘s real Skunk Works is over, but whilst that makes me sad, I think it’s also a good thing – we need innovation to be spread out, not concentrated in blobs.

Equally important is that Innovation doesn’t thrive in isolation. Look at Google, famous for their 70-20-10 strategy:

Eric Schmid[t] outlines their current process as follows:

1. 70-20-10 Principle: By the most recent analysis, Google is not as high as 70% in the core of search/ads, so now they’re reshifting the focus again to adjust (in other words, we’re doing more search again…).

The 20% represents Google’s bargain with technical people, allowing them to roam free to encourage creativity—where all the most interesting products emerge.

The 10% is for wacky ideas that might not work out but feel worth pursuing.

The opportunity to innovate at Google is baked in. It’s assumed that if you have a good idea, that you’ll find time to investigate it and that some of those ideas will eventually turn into products and that some of those products will be a success. What Google does not do is put a small number of people in a room and expect them to come out after a predetermined period of time with a fully-formed product, instead, they let everyone innovate.

A lot of innovation is trial and error, it’s research, development, experimentation, failure, trying again, tearing your hair out, and having one of those little light bulb moments brought on by something someone said in passing. It’s not a clean, clear-cut process that you can switch on and off. It’s distributed, messy, and better when there are lots of people available to talk to about what’s on your mind.

The Economist, and every other business that cares about what’s going on online, should be looking at how they can allow people within their company to innovate. What does it take to make innovation baked in to your business? How can you give your staff the confidence to have ideas? The time to do research? The resources to develop their ideas? How do you evaluate those ideas, and when?

Learn to accept that some of your staff actually do know what they are talking about
I have learnt not to be surprised when I discover that my contact person at a business that is hiring me to help them actually knows nearly as much about social tools and their use as I do. That might sound cocky, but I’ve spent three years focusing very hard on learning how social tools work in business, and I have a lot of real world experience to draw upon. When I meet someone who has a good insight an instinct into social tools, it’s always a delight, and when they turn out to be hiring me to help them, that’s even better.

The question I find myself asking is, why are they hiring me? The answer is that their colleagues don’t believe them. Because I have the word ‘consultant’ in my job title, people listen to me more than they listen to their own colleagues. And this isn’t restricted to the companies who hire me – many of my friends say they suffer the same problem where they work.

In one case, two people I know, separated by two years, gave the same advice to the company they worked for. That company, despite having twice been given very good advice, employed a consultancy to tell them… exactly the same thing. Had they believed the advice given to them by one of their own people several years ago, they’d be in a far better shape now than they are.

Rigidly hierarchal companies can often fail at innovation because an idea is evaluated, not on its merits, but rather where it came from in the hierarchy. Consultants can sometimes get around this because they aren’t part of the politics of the company. Their ideas can be pitched as fresh outside thinking, although smart people in your organisation, who had been championing the same ideas, may decide that the best thing they can do for their career is to leave and become consultants themselves.
It’s absurd to think that people are automatically stripped of their intelligence and ability to innovate as soon as their name hits a payroll, but so many companies act as if this is the case. “You’re one of us, ergo your idea must be a bit crap.” If you want to have an innovative company, learn to listen to your own staff – all of them.

Learn to take risks and to accept failure
Your staff can come up with the best ideas in the world but if you don’t give them the opportunity to take risks and to fail, you will never be able to take full advantage of their ideas. Innovation involves risk. You cannot have one without the other. If you are not willing to take risks, if you’re not willing to fail and to be seen to fail, then you are not going to succeed because success does not come without failure. Now you can mitigate the risk by doing small pilot projects, by using your critical faculties to tell you when you should pull the plug, and by being open and honest about what you are trying to do. In fact, do those things and you’ll get more props for trying than you will get criticism for failing. But you cannot remove risk completely – it’s a fact of life.

Indeed, if you start to “innovate” with the attitude that you want a project that will be a guaranteed success, then you are guaranteeing your own failure. Innovation doesn’t come with guaranteed success – it is experimental by its very nature and some experiments go wrong. You have to, as a business, make peace with the idea that not everything you try will work.

Oh, mama, we’re all in New Media now
Any company who has customers is now in New Media (no matter that New Media isn’t so new anymore). If you have customers, then you need to be thinking carefully about how you communicate with them, how you build relationships with them, what tools you should be using and what arenas you should be in. You need to be doing R&D, in house, all the time, to help you understand what’s going on in the world and how it affects your business. R&D isn’t necessarily about coming up with brand new stuff, it’s about getting to grips with what others are doing, with trends, with technology, with change. You can’t just sit back and wait for someone else to come along and tell you what to do next – whether that company is your PR company or an analyst or your trade press. You need to be actively finding out what’s happening in the world and assessing how you can take advantage of it.

I have seen so many businesses think to themselves, “Oh, we’ll just start a blog”, and they have, and they’ve got it wrong, because they never bothered to find out any more about blogging than which bit of software to install. They didn’t do any R&D, they didn’t keep abreast of the innovations happening in the outside world, they just grabbed hold of a buzzword and thought that that was enough. It’s not.

Innovation is not a buzzword to be repeated in meetings, it’s an action, a culture, a day-to-day activity.