How can GM turnaround the business? Is Innovation the answer?

General Motors - GM - was ranked a top 20 innovative company in the world according to the BCG - Business Week 2008 survey. In early 2008, everyone was bullish about GM's future. However, in just over a year since this review was published, the big question on everyone's mind today is: "Can GM survive?" If you answer this question with YEA, then you ask the next question: "How can GM turnaround?" General Motors is really close to going bankrupt. Were it not for the federal loan in late 2008 to the tune of a whopping $13.4 billion, GM would have bellied up by now.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

And to make matters worse, GM made this announcement on Friday, March 13, 2009:

General Motors Corporation Recalls More Than 276,000 Vehicles For Gear Fix

"Reuters reported that General Motors Corporation is recalling 276,729 passenger vehicles to correct a problem in certain cars that could cause them to roll when parked, the U.S. government said. The National Highway Traffic Safety Administration (NHTSA) said in a recall notice that a suspected flaw in the transmission cable system may not allow gears to fully engage when the vehicle shifter shows the driver that car is in 'park.' The vehicle could roll away after the driver has exited, NHTSA said in its notice. The 2009 Models affected include the Chevrolet Cobalt, HHR, Malibu, Traverse and the GMC Acadia, Pontiac G5, G6 and the Saturn Aura and Outlook."

On a positive note, GM reported 127,296 Deliveries In February. Is that positive?

• Chevrolet retail cars continue to gain share, led by Malibu's 33 percent retail sales gain compared with last year
• Chevrolet Traverse, GMC Acadia, Buick Enclave and Saturn Outlook drive mid-utility crossover retail sales up 35 percent, share up 10 percentage points, compared with a year ago
• GMAC retail penetration increased dramatically to more than 30 percent of sales in February; Credit Union-financed sales now about 10 percent of total

"General Motors dealers in the United States delivered 127,296 vehicles in February, down 52.9 percent compared with a year ago, driven by a 75 percent reduction in fleet sales." On surface, this is a recipe for bankruptcy! When sales go down more than 50% year over year, you better have enough cash to survive, or get ready for a fire sale.

But there is a positive - a faint light at the end of the tunnel: "GM's car sales compared with January were up nearly 23 percent, and crossover sales increased 6 percent, as financing availability continued to improve and slightly more fleet orders were able to be filled."

The biggest problem facing GM today though is: The Cash Burn. GM's operating costs are very high, and unless GM finds a meaningful way to bring these costs down, it will need another cash infusion from the government - very soon! Or file for bankruptcy, and push the time-table for turnaround back by a few years. Or, GM has to find new ways to sell lots of cars at very high profits - but in this recession and tough economy, this may be a very steep uphill climb. So, we go back to the central question: What can GM do in order to survive in 2009, and then plan forward for a possible turnaround in 2010 and beyond?

First things First: A matter of survival

In order to survive 2009, GM must first clean out the closet!

Let's say, as a dual-income working family, you are planning your monthly budget:

Husband's salary = 47.5% of total

+ Wife's salary = 47.5% of total

+ Interest income from savings = 5% of total

--------------------------------

Total Income = 100%

Your Total Expenses are typically divided into Fixed, Discretionary and Unplanned Expenses.

Fixed Expenses would include home mortgages or home rentals, car payments, insurance, utilities, groceries, taxes, gas, etc.

Discretionary expenses would include shopping, eating out, travelling, movies, education, buying a new car, etc.

Unplanned expenses would include emergencies, healthcare, legal, something breaks down, etc.

In general Total Income should be at least equal to Total Expenses for you to live comfortably. It is recommended though that Total Income should be at least 20% higher than Total Expenses for you to save for the future, and build out a nest egg. In tough economic times such as what we are facing today, families reduce their Discretionary Expenses considerably including buying a new car to alleviate for a lost or reduced salary (or fear of losing a job), and hope that they do not get burdened by Unplanned expenses.

What does this have to do with GM?

In the case of GM, on the one hand, it is losing revenue (salary) owing to reduced sales of its automobiles by more than 50% year over year (in part, due to reduced Discretionary Expenses by consumers, in large part due to non-competitive product mix), but it is also suffering from high fixed costs (expenses) owing to very large manufacturing workforce, higher pension and union costs, and many non-performing divisions.

Let us look under the hood ->

GM Revenue has been declining rapidly since reaching a peak in 2006. From over $200 billion in 2006, total sales are down to under $150 billion in 2008. A decline of over 25% in total revenue. And 2009 promises a potential 50% decline from 2008 revenue (unless we see some turnaround in second half), so this could mean total revenue in the neighborhood of $75 billion for all of 2009.

GM Gross Profits have been been falling even faster since 2006. The slide in Gross Profits is even steeper than the fall in revenue, and this shows management misdirection. While the revenue was falling, GM management did not take adequate measures in 2007 to reduce the operating costs. And the climbing operating costs suddenly became a huge burden in 2008.

GM Gross Margins are in low single digits, and shrinking further. This is another way to look at how well GM is operating - or Not! Lower sales and higher operating costs are a recipe for huge losses! And this is exactly what happened at GM. The margins were constantly pressured not only due to lower sales and high operating costs, but also owing to increased competition on key market segments, and forced reduction in prices on major GM brands.

Resulting in huge operating losses for GM in 2008. Losses are accelerating further in 2009 owing to higher operating costs (GM has still kept many of the plants open), non-performing assets, higher salaries and retirement provisions, 50% reduction in sales, increased competition from brands with superior, innovative products, and lack of innovative products launching in 2009.

How can GM turnaround in 2010 and beyond?

If GM were to survive 2009 (most possibly with another government aid), GM first has to cut back massively - every non-performing division, every loss-making operation has to be cut. These are hard decisions. But there is no reason to continue making automobiles that lose money even before they are shipped! GM knows today what cars make money, and what cars don't. Start with every car that does not make money, and scale back everything with that car. This also means that for the cars that are making money today, it may make sense to invest further in these initiatives. This should give GM some breathing room in 2009.

Next, GM must innovate! GM has to go back to the drawing board. After all, this is the company that made automobiles mainstream using the assembly line. Incidentally, Toyota surpassed GM as the world's largest maker of automobiles in 2008. Toyota is facing major challenges as well owing to the current economy, and may post its first annual loss in over 50 years in 2009. Just look at how GM compares versus Toyota in 2008.

However, Toyota's total revenue exceeded GM's by about 50% in calendar year 2008.

And Toyota remained profitable in calendar year 2008 as well, albeit considerably less than its 2007 profits.

But the key difference is Gross Margins - Toyota maintained double-digit gross margins in all of 2008. This is huge considering that GM's gross margins shrunk to low single digits, while Toyota had closer to 14%. This means Toyota runs it operations with considerably less expense than does GM. Call it Toyota's operational and innovation excellence, or GM's management hibernation, Toyota delivered vehicles that mattered to consumers. And consumers bought a lot of hybrids in all of 2007 and 2008.

Finally, GM's return on equity investment (stock performance) vis-a-vis Dow Jones (of which GM is a component) and Toyota Motors is terrible.

GM's Turnaround Plan

If GM were to turnaround its business in 2010 and beyond, it has to be grounded on business innovation. Open innovation driven by excellence in products, creativity in design, change in business model and streamlined operations. Process Innovation driven by change and leadership.

GM gave up the leadership position it once enjoyed to the likes of Toyota, Honda, BMW, Nissan, Volkswagen, Ford, Tata, and even Hyundai. How does GM become a leader again? It is going to be hard for GM to be many things to many people in 2010 and beyond. It simply does not have the fire power to create so many products. So, GM must compete on its own turf in specific markets. GM must first take the markets where it is profiting today. If Chevrolet Malibu is performing well, GM must go all out, and conquer this segment of the market outright. Easier said than done, but GM must out-market the competition in this segment, and do so profitably. A fine line indeed.

GM must find similar brands that are winning with today's consumer. What are these car brands? And GM must invest smartly in these brands. This is where GM has to invest for the future. GM must not focus on hitting a home run with the Chevy Volt in 2010 and beyond. What if GM fails in this venture? Chevy Volt cannot be the "save all" of GM strategy. Rather, GM must innovate with the brands that are making money today, and invest in a meaningful manner with these brands. GM knows it is very hard to build a brand, and much harder to create winning models. As for divesting brands, now is the time. Every non-profitable brand must go. This could mean closing down operations outright for all loss making divisions.

GM must make products that matter to today's consumer. This means taking a page out of Apple's innovation strategy: Make cool cutting-edge advanced technology products that sticks, create the cool marketing and cool brand that resonates with young buyers, provide excellent customer service and experience that matters, capture the emerging landscape of demand and trends such as hybrids and alternative energy, and execute! GM has to capture the imagination of the young buyer in the twenties and thirties. GM has to be appealing and sexy to these buyers. GM has to become a brand that is fresh and modern.

GM Dealership Experience

I visited the local Power Chevrolet GM dealership in Irvine, Orange County along with my son to check out the latest Chevy Malibu. Whereas the car salesman was great to talk with, and eventually helped us with a test drive of the Chevy Malibu LT2 (in between, he began helping a new customer), the manager of the dealership was not as friendly. I wanted to test drive the Chevy Malibu LTZ that had full leather seating and offered the highest performance. However, this particular Chevy LTZ was located inside the showroom. The car salesman asked the manager to check if he can take the car out of the showroom for me to test drive. To which, the manager replied: "Why don't you find something similar from the lot outside?" And there was not any LTZ in the lot. So, I ended up driving the LT2 instead. LT2 is no LTZ. I did enjoy the spacious interior, and the LT2 gave a spirited ride. The acceleration was spotty, and the engine sound was noticeable as I stepped on the pedal. The car was also running on empty gas, so I had to cut short the test drive. I think Chevy Malibu offers a good value, and I am going to hold my judgment until I test drive the LTZ (hopefully, second time will be a charm).

Where would be GM in 2011 and beyond? I for one will be watching as GM's management tries to steer it out of a shipwreck for a safe landing.

GM in 2011 - Mother of all turnarounds!

GM emerged out of bankruptcy courts in 2009, reestablished as a new company in July 2009, and began turning around its business in 2010. GM went IPO again in November 2010, and it was the world's largest IPO. On February 24, 2011, General Motors reported its first full-year profit since 2004. Equally amazing is this fact: The automaker suffered $103.7 billion in losses from 2005 through 2009 (not sure if any other company can match these staggering losses). GM avoids paying taxes on the $4.7 billion it earned in 2010, and on future profits for years to come, because of a favorable government ruling in 2010 on previous losses. The Wall Street Journal estimated the tax break, including credits for costs related to pensions and other expenses, can be worth as much as $45 billion over the next 20 years.

Household nameplates such as Pontiac, Saturn, Hummer, and service brands like Goodwrench were discontinued. Others, like Saab, were sold. Daewoo brand in South Korea has been replaced with Chevrolet.

GM recently introduced the all new Chevrolet Volt, or Chevy Volt, the marquee plug-in electric car that makes GM a real innovator. The Chevrolet Volt is an electric vehicle with back-up generators, powered by gasoline. The production Chevrolet Volt was available in late 2010 as a 2011 model with limited availability. GM delivered the first Volt during December 2010. Volt may perhaps become the best-selling GM car. Even if Volt does not become a best seller, Volt will provide GM an innovative edge in the auto industry that will have a huge halo effect. Of course, GM needs to make sure that Volt is a profitable brand from day one. Volt gives GM a new launchpad for plug-in vehicles. Volt looks great on the street, and I am looking forward to my first test drive.

GM Turnaround is for real... And Kudos to GM management for making this happen!

Originally published March 2009
Updated April 2011

Would you like to become an innovator? I invite you to participate in the Innovation Bootcamp workshops:

The Innovation Bootcamp consists of Six Engaging Online Workshop Sessions (details below):
1. Benchmarking and Leading with Innovation
The Business Case for Innovation
2. Unblocking Creativity and Innovation
The Essential Processes and Skills
3. Unleashing Team Innovation
Great Teams Deliver Great Innovations
4. and 5. Business Innovation Case Studies
Learn how Top Innovators Lead with Innovation
6. Building an Innovation Factory
Create a sustainable, scalable Innovation Process

Or, download my leading eBook on Creativity and Innovation in Business used by professionals, faculty and innovators at educational institutions and businesses all around the world including EDS, Ericsson, Center for Sales Strategy, IdeaChampions, Acara Global, Byrne Dairy, Cleveland Clinic, Magpie, DOJ/FBI, HP, Hewlett Packard, Intervista Institute, Fryett Consulting Group, Satellite Shelters, ProductVentures, Speakeasy - a Best Buy company, Jarden Consumer Solutions, Hallmark, Infinium, DeakinPrime - Deakin University, Lucas-TVS, McCann Worldgroup, S.P.Jain Center of Management, Suffolk University, RiCoMan, AmpControl, Craig Rispin, Momentive, Champion Laboratories, University of Phoenix, University of Washington, SFR - Neufbox, Attwood as Edison, Academy of Sport, Ideogenesis, Principled Innovation, Meridian Partners, Ananzi, Tangibility, Syngenta Global, Speedy, The Business Lab, Deloitte, Lane Management, University of California at Irvine, Wharton Business School, Babson University, Larsen & Toubro, Nokia, Credera, Pfizer, Bilkent University, Indian Institute of Science and many more.

This eBook is a 212-page collection of over 50 best practices, case studies, and insights on the current state of Innovation in Business at Top Innovators including Apple, Google, Netflix, 3M, Proctor and Gamble, Johnson and Johnson, Toyota, GE, BMW, Deloitte, Frito Lay, IBM, Nike, Starbucks, Southwest Airlines, Microsoft, Dell, Intel and more. With pertinent articles from the award-winning Creativity And Innovation Driving Business Blog, this Faculty eBook provides real-world examples on how the Top Innovators innovate and grow their business successfully time and again, especially during economic cycles. Creativity And Innovation in Business is a definitive guide that will help you unblock creativity, uncover and create game-changing innovations, and make exponential business growth a reality. Learn more...

References:

GM Press Releases, Yahoo Finance, Google Finance, Toyota Press Releases, Reuters, Wikipedia

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Build an Innovation Factory, Learn to be an Innovator, Launch new Innovations

Creativity And Innovation Driving Business announces engaging online workshops to jump start innovation at your business. Learn how top innovators in the world innovate, change and grow their business successfully, especially during economic cycles. The Innovation Bootcamp workshops will INSPIRE you to unlock your creativity, spark new ideas, uncover and create game-changing innovations, and accelerate your business.

InnovationMain.com and Sanjay Dalal, Chief Innovator, have successfully delivered over 500 hours of Innovation Bootcamp web seminar workshops live and on demand to online attendees!

Learn over 100 relevant + insightful strategies, tools and techniques to unleash creativity and innovation!

The Innovation Bootcamp will help you:

• Become an Innovator at your Organization.
• Unleash the Creativity and Spark new Ideas.
• Launch New Innovations with sound Processes.
• Accelerate the Growth of your Business.

"The Innovation Bootcamp has helped me in countless situations, not only on the job but also in my personal life. Sanjay Dalal's tenacious and diligent coverage of all the core innovation techniques and case studies has given me a more well-rounded understanding of the business world." - Business Consultant

The Innovation Bootcamp consists of Six Engaging Online Workshop Sessions (details below):
1. Benchmarking and Leading with Innovation
The Business Case for Innovation
2. Unblocking Creativity and Innovation
The Essential Processes and Skills
3. Unleashing Team Innovation
Great Teams Deliver Great Innovations
4. and 5. Business Innovation Case Studies
Learn how Top Innovators Lead with Innovation
6. Building an Innovation Factory
Create a sustainable, scalable Innovation Process

Hurry...April 2009 Innovation Bootcamp registration closing fast. April 10, 17, 24 from 8:30 am through 4:00 pm Pacific time! Register now...

The Innovation Bootcamp is delivered live and online using Web seminars! You only need a computer and 90 minutes to engage, interact and collaborate live, at home or at your office! It's that simple...

The Innovation Bootcamp consists of online interactive workshops of 90 minutes each. Each workshop begins with an interactive quiz, collaborative brainstorm and a live Q&A. Our online workshop seminars are limited to 15 attendees per bootcamp to facilitate maximum interaction and collaboration. Presenting the outline of these intensive workshops:

1. Benchmarking and Leading with Innovation

• The Business Case for Innovation
  
• The Current State of Business Innovation - Six Innovators' timeless wisdom
  
• The Disruptive Innovation Gap - Five strategies to Change your business
  
• The Innovation Index - Correlating Innovation & Business Performance - Three insights
  
• Measuring Business Innovation Success - Focus on game-changers - Three takeaways
  
• Innovations for the Web 2.0 Business Models - Ten Business models
  

2. Unblocking Creativity and Innovation

• The Essential Processes and Skills
  
• Blocking Creativity and Innovation - Four blockers and Nine Processes
  
• Failures Driving Innovation - Five Takeaways to implement today
  
• Developing Organizational Creativity - Twenty Five techniques to jumpstart creativity
  
• Avoiding Cycles of Innovation - Four Innovation blunders - Build Institutional Memory
  
• Six Ways to Find Innovation - Spark New Ideas for your Business
  

3. Unleashing Team Innovation

• Great Teams Deliver Great Innovations
  
• Ten Traits of Creative Leaders - Are you an innovative leader?
  
• Leadership Driving Innovation - Ten must-have leadership drivers
  
• Seven Characteristics of Highly Innovative Teams - Build that great team
  
• Examples of Effective Teams - Learn how creative teams deliver - Three examples
  
• Ten Principles to Unleash Team Innovation - Crank up your Team Creativity
  
• Unlocking Team Creativity - Create that well oiled assembly line
  

4. and 5. Innovation Case Studies

• Learn how Top Innovators Lead with Innovation
  
• Business Models, Product, Process and Customer Experience Innovation
  
• Apple - What makes Apple the #1 Innovative Company?
  
• Google's Innovation Strategy and performance vis-a-vis Yahoo
  
• Netflix versus Blockbuster - Winner Takes All. Netflix' Innovation strategy
  
• Toyota's Innovation Factory - Innovation Assembly Line
  
• Strategic Innovation at Deloitte - Edge to Core to Edge
  
• Co-creation driving Innovation - Customers, Partners, Users, Prosumers - Web 2.0 Innovations

6. Building an Innovation Factory

• Create a Sustainable, Scalable Innovation Process
  
• Five Principles For Driving Successful Innovation - Key takeaways
  
• Making a Business Case for Innovation - Strategic Plan to drive innovation
  
• Implementing Innovation Models at Your Business
  
• Group Innovation Brainstorm and Project
  
• Final Project to propose, plan and create an Innovation Factory

The Innovation Bootcamp will help you:
1. Create 100+ real strategies, tools, and techniques to unleash innovation at your organizaton.
2. Prepare you and your team to convert ideas and creativity into successful innovation.
3. Enable you to accelerate and grow your business profitably.

"Innovation distinguishes between a leader and a follower. Innovation has nothing to do with how many R&D dollars you have...It's about the people you have, how you're led, and how much you get it." - Steve Jobs, Apple chief executive officer.

Who should register?

VPs, Consultants, Managers, Leaders, Marketing Managers, Product Managers, Technologists, Engineers, Professors, Business and Engineering Professionals, Marketing Executives, Information Executives, Team Leaders, Sales Managers, Sales Directors, Strategists, Product Marketing Managers, Business Development Managers, Entrepreneurs - Professionals who wants to excel at Innovation in Business

Why should I attend?

Challenge your mind. Think different. Be innovative. Unlock your creativity. Create and generate new ideas. Convert ideas into successful innovations. Accelerate and grow your business. Become an innovator and entrepreneur. Build an Innovation Factory. We guarantee that you will be inspired and ready after attending the Innovation Bootcamp to jumpstart new innovations at your business.

An Investment Well Worth the Cost

The Rigorous Innovation Bootcamp only costs $49 per session. We offer the first workshop session for FREE. We are confident that you will join the entire Bootcamp after attending our first session. What does $245 (total cost) give you? Live, online coaching with top innovator in the nation, the leading Business Innovation eBook used by over 300 organizations including Pepsi, EDS, Hallmark and Pfizer, pertinent presentation training materials to immediately help you innovate at work (a $200 value), Innovation Bootcamp certificate from Creativity And Innovation Driving Business, and a paid subscription to our Business Innovation monthly report for one year (a $120 value).

Register for the Innovation Bootcamp Today

Rigorous Innovation Bootcamp delivered over six sessions (back to back all day):
Bootcamp Schedule: April 10, 17, 24 Time: 8:30 am until 4:00 pm Pacific time Register now

About Creativity and Innovation Driving Business
The mission of Creativity and Innovation Driving Business is to provide uncommon insights, strategy and solutions with proven processes that drive Creativity and Innovation at your business, create real market growth and success for your products and services, and achieve market leadership. We make innovation a sustainable competitive advantage, inspire you to build an innovation factory, effect and manage change, and accelerate your business. We have considerable experience and expertise in working with small, growing and established companies, product and marketing departments, and innovation teams.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

The Innovation Bootcamp Jumpstarts Business Innovation And Growth. Unlock Business Creativity, Be An Innovator! Signup Today For Workshops in Jan 2009

Creativity And Innovation Driving Business is launching engaging online Innovation Bootcamp Workshops to Jumpstart Business Innovation and Growth starting January, 2009. Learn how the Top Innovators innovate and grow their business successfully time and again. Unblock business creativity, uncover and create game-changing innovations, and make exponential business growth a reality. Signup today for workshops beginning January 2009.

Irvine, CA (PRWEB) December 19, 2008 -- Creativity And Innovation Driving Business is launching engaging online Innovation Bootcamp Workshops to Jumpstart Business Innovation and Profits. Register Today for the Innovation Bootcamp beginning in January, 2009. Learn how the Top Innovators innovate and grow their business successfully time and again, especially during economic cycles. Unblock your creativity, uncover and create game-changing innovations, and make exponential business growth a reality.

The Innovation Bootcamp is delivered live and online using Web conference technology. You only need a computer and 90 minutes a week to engage, interact and collaborate live, at home or at your office.

The Innovation Bootcamp will help you:

1. Become an Innovator at your Organization.
2. Unleash the Creativity of your Team.
3. Accelerate the Growth of your Business.

"Innovation distinguishes between a leader and a follower. Innovation has nothing to do with how many R&D dollars you have...It's about the people you have, how you're led, and how much you get it." - Steve Jobs, Apple chief executive officer and co-founder.

Learn more about the Innovation Bootcamp and register.

Collaboration with Top University in the Nation

"Focus on building the organizational capabilities that allow a firm to create the capacity for continuous innovation." Leonard Lane, Senior Assistant Dean MBA Programs, University of California, Irvine

Creativity And Innovation Driving Business is honored to partner with University of California, Irvine, The Paul Merage School of Business towards offering the accelerated Innovation Bootcamp as part of the Strategic Innovation Class in 2009.

About Creativity And Innovation Driving Business

The mission of Creativity and Innovation Driving Business is to provide no-nonsense insights, strategy and solutions with proven processes that drive Creativity and Innovation at your business, create real market growth and success for your products and services, and achieve market leadership. We have considerable experience and expertise in working with small, growing and established companies, various departments and distributed teams.

Creativity And Innovation Driving Business
Phone: 949-288-6880
Online: http://www.InnovationMain.com

Quality Innovations at Ford

"Ford Motor Co. (NYSE: F) supplanted Toyota as leader of the pack in J.D. Power and Associates' annual initial quality rankings released Wednesday, grabbing more individual awards than any other automaker for the first time since 1998, when it tied for the top spot.

Ford ranked highest in five of 19 segments in this year's survey. That's two better than in 1998 - the last time a U.S. automaker was on top - when Ford tied with Toyota (NYSE: TM) and Honda (NYSE: HMC).

Ford took the top spot in five of 19 segments in the survey, better than the three it garnered the last time around. The Dearborn automaker earned segment awards for the Ford Mustang, Lincoln Mark LT, Lincoln MKZ, Mercury Milan and Mazda MX-5 Miata. Mazda is 33.4 percent owned by Ford.

....

Ford's Lincoln brand, which jumped from 12th to third in overall vehicle quality, averaged 100 problems per 100 vehicles. It was behind Porsche and Toyota's Lexus luxury brand, which averaged 94 problems per 100 vehicles.

"We saw dramatic improvement from Lincoln," said Neal Oddes, J.D. Power's director of product research and analysis. "It was a fantastic year for the Mercury Milan, with dramatic improvements in terms of defects."

Overall, he said, Ford's strength came from new launches such as the Edge, MKX and MKZ.

Ford spokeswoman Anne Marie Gattari said those launches "speak volumes about what we're doing right."

"What we saw today is the result of several years of adhering to our design and manufacturing processes with complete discipline," she said. "It took some time for the results to be evident."

Bottomline:

Ford rocks!! I have seen the Edge on the road and also the MKX and MKZ - these are great looking cars . Also the Mustang. Ford is making cool cars that consumers want, with better quality, and sound manufacturing processes. Quality Innovations at Ford!!

Constant Innovation Driving Organic Growth

How does a business take its innovation strategy beyond the "eureka" moment, and create sustainable growth? Go beyond the one-off disruptions that many companies become well known for. Formulate a dynamic process of continually creating new business models, improving the customer experience, opening new markets, launching new products, and creating a culture of innovation.

The Wharton School at the University of Pennsylvania is offering a unique program to drive innovation at your business beyond one-offs, and help you create a complete process for creating constant innovation: Full-Spectrum Innovation: Driving Organic Growth. The program offered from June 25-June27 at Wharton will help you:

* Better target innovation resources to achieve the most impact.
* Develop a broad view of organizational innovation.
* Gain a toolkit of diverse approaches and best practices for encouraging innovation.
* Rethink the "innovation DNA" to design and lead innovation across the organization.

My observations on how innovations are created at the Top 20 Innovators of The Innovation Index had led me to create the following five principles for successful innovation:

1. Vision to create new products, business models or processes that make a difference and create new markets
2. Systematic processes and rigor that stimulate creativity and learning to execute on the vision
3. Reward and recognition system for teams to take measured risks, experiment, and assess
4. Focus on clear and present customer needs, the market facts, and the intangible
5. Growth-oriented leadership that is decisive, inclusive, focused, takes risks, and has market expertise

"The Wharton program's workshop approach offers hands-on experience in defining and implementing innovation in an organization. As part of a cohort of innovation leaders from around the world, attendees will have inside access to the latest best practices - from innovative companies such as P&G and Southwest Airlines (two of the Top 20 Innovators on The Innovation Index). As well as research from Wharton's Mack Center for Technological Innovation, which leads one of the largest ongoing research projects on managing emerging technologies,” says Michael McTigue, Director of Communications at Aresty Institute of Executive Education, The Wharton School.

The program offers interaction and dialog with thought-leaders including George Day and Paul Schoemaker; ability to learn and experiment with new innovation frameworks from Larry Huston, former vice president of innovation at Procter & Gamble and the creator of their celebrated "Connect and Develop" strategy; and mine the value of blogs and search engines in the "Innovation in Cyberspace" panel discussion, featuring front-line innovators from Southwest Airlines and influential bloggers.

In particular, McTigue emphasizes, "Readers are now organizing themselves around topic areas at a grassroots level, sharing ideas, and offering constructive criticism. Blogs including "Creativity and Innovation Driving Business" are an invaluable forum for innovation leaders who want to create cultures of innovation in their organizations."

McTigue promises a great experience: “Our faculty members will provide perspectives on developing a market-driven strategy, understanding new product development successes and failures, improving "peripheral vision" to sense emerging opportunities, and engaging in value innovation to capitalize on new market space.”

It is great to see The Wharton School leading this paradigm, and offering pertinent executive education on Innovation that includes today’s latest technology drivers. Strategy leaders, managers of new businesses, chief innovation officers, chief technology officers, and product development leaders responsible for driving top-line growth, and promoting and delivering innovation would definitely want to attend this program.

Creating Team Innovation - Chapter Three - Unleashing Creativity And Innovation

How do leaders create highest performing teams that unleash unmatched creativity and innovation, thereby making the best products built on repeatable processes in the marketplace? Increasing the team’s productivity, creativity, innovation, and potential for success is every manager’s goal. Importantly, how does a manager avoid team frustration and disruption, and at the same time manage team dynamics? Creating Team Innovation – Chapter Three – explores these key elements of team structure and behavior that create constant Team Innovation.

Creating Team Innovation – Chapter One presented the seven characteristics of highest performing teams resulting in consistent Team Innovation. Chapter Two – Examples of Effective Teams provided examples of successful teams in various organizations.

Here are the Ten Principles for creating highest performing teams that produce continuous Team Innovation:

Ten Principles for creating the highest performance teams and team innovation:

1. Establish the reasons and objectives of forming a team. Create a concise team vision and mission statement that is crisp and well understood.

2. Recruit the best team players who will be the most adept at achieving the said team objectives, vision and mission. Find employees both from within the organization through your own network of friends, peers and managers, and externally through the best recruiters available.

3. Establish clear, participatory, effective and elevating team goals and plans, preferably using SMART system. Ensure that the team’s plans and future direction are clear and supported, the team is kept informed of the ongoing progress, quality standards and effectiveness set, and there is complete commitment from team members towards achieving these objectives.

4. Articulate and communicate team task functions and relationship functions, and help the team understand the differences through examples. Organize and lead the team so that the team coordinates the efforts and cooperates well. Create a high degree of trust and confidence among the team members, ensure that the team members participate fully and communicate openly making sure that everyone is always included, encourage different viewpoints and foster diversity in thought and members, and build camaraderie, closeness and friendship within the team.

5. Develop healthy and productive group and meeting norms, grow team cohesiveness by building collaboration, and manage social loafing consequences. Make decisions by consensus after seeking opinions from each team member, help the team towards making its own good decisions, resolve problems and find solutions through mutual effort and open communications, and evaluate team behaviors and perceptions openly.

6. Proactively manage team behaviors and conflicts that could either encourage or harm member relations, and regulate situations where individual needs are not satisfied. The emphasis is on “proactively” managing conflicts. A high performing team will have conflicts, openly and often. Conflicts are a healthy sign of a team cooperating and communicating ideas frequently. The manager should create sound conflict resolutions techniques wherein the conflicts are addressed in a timely manner, and conflicts remain rooted in problems and issues, and not about members.

7. Cultivate and unleash Group Creativity and Innovation. A leader becomes indispensable and important to the organization when they can develop creativity throughout the organization--in their team, and in the processes the leader uses to tap and leverage that widespread creativity. What processes drive Group Creativity and Innovation? The team leader leverages Group Creativity techniques including Basic Brainstorming, Nominal Group Technique (NGT), and NGT-Storming. A creative team leader will always ask a lot of questions, never judges, encourages free-wheeling, goes for quantity (of ideas), and promotes piggybacking during the group creativity meetings. Finally, a witty quote about change, and stepping into the team member’s offices and asking a simple question: “any creative ideas today?” will always encourage creativity and innovation among the team.

8. Analyze, update and maneuver team communication according to the twelve categories comprising Bales’ Interaction Analysis. Bales’ Interaction Analysis allows the manager to review the team’s member communications in four categories: Positive reactions, Attempted answers, Questions and Negative reactions. By analyzing this once every few months, the leader can not only get insight on how the team communicates, but also provide individual members feedback. If the overall communications are moving towards increasing Questions and Negative reactions, the leader can take appropriate steps to enhance the communication flow.

9. Create a Team Assessment Inventory on the team’s general productivity and climate, team goals, processes and procedures, and member relationships every three months to analyze and calibrate the team performance. This is very important if the team is going to be working together on projects for the long term. Also, this would provide the manager a self-assessment on how well the term is performing.

10. Have fun!! Create an environment wherein the team members enjoy their work, and the team morale remains high. The leader needs to exude excitement, and inject that passion so that the team members also work with high degree of energy and excitement. Every month or once every few months, the leader should take time to enjoy the achievements, and plan fun activities with the team.

If you enjoyed reading this Innovation best practice, I recommend the complete list of Creativity Innovation Best Practices.

References:

eCornell

Creating Team Innovation - Chapter Two - Examples of Effective Teams

In Creating Team Innovation – Chapter One, the characteristics of a high performance team that led to consistent Team Innovation was presented. Before I jump into how to create high performance teams, I would like to provide quick illustrations of three such teams.

Chapter Two – Examples of Effective Teams provides best practices of effective teams in various organizations, looks under the hood on what made these teams effective, and exposes areas in which these teams could have done better.

What are some examples of effective teams in an organization of which you have either been a member or a leader?

What made it an effective team? What could the team have done better?

Example One

Team:
12 Department heads and 175 employees in a Golf & Spa Resort.

Team Goal:
Business turnaround.

Team Achievement:
The team managed to turnaround a resort that was losing significant money to a hotel that actually began producing profits.

What made it an effective team?
1. One of the major factors that turned the hotel around financially was that the management focused on having the right people in the right jobs.
2. The hotel management focused on selecting (both management and hourly staffed) the right talent, setting the expectations, and defining the right outcomes.
3. Over time, the hotel ended up with a group that embodied the term “team work”.

What could have been done better?
Give everyone a fair opportunity to prove themselves (after giving the tools and training necessary to be successful). However, once you have determined that it is not going to work out, you cannot wait too long to deal with poor performers. Not dealing with those issues will create frustration amongst those that are performing well.

Example Two

Team:
Kitchen crew at a restaurant.

Team Goal:
Product Innovation.

Team Achievement:
It was the most highly creative and fun group, that created great camaraderie and spirit in the kitchen that led to new innovations in food and service.

What made it an effective team?
1. A spirit of creative freedom was fostered by everyone, from the top down. Even though it was a very busy kitchen, there was always time to work on a pet project or to create a new dish or daily special.
2. For the most part, people were able to put aside their egos. It was very common to work on a dish, and to have someone come over and give his input, and then another person would come over and contribute his two cents. After awhile, a great new dish would emerge, which usually had little resemblance to the original thought - but was a collaboration of creative effort. Everyone would look at it with pride.
3. People were publicly praised and recognized for a job well done
4. There was a common passion and enthusiasm for what we were doing. The owners seemed to be very good at attracting and recruiting this type of employees.
5. The standards and expectations were always being raised. There was no room for complacency.

What could have been done better?

Many individuals eventually left and opened their own restaurants in the area.
Ownership was at times unreasonable, did not tolerate or forget mistakes.
The kitchen atmosphere took on an "us against them" mentality, which ironically brought the kitchen crew members together.

Example Three

Team:
Process Quality team consisting of over ten managers from sales, service, product and infrastructure organizations.

Team Goal:
Process Innovation.
The goal of this team was to surface any quality issues that the sales or service team experiences with the currently released or soon to be released products. If the issues required follow-up, the product and infrastructure managers provided a detailed follow-up analysis. If the quality issues required immediate resolution, the product and infrastructure managers will escalate these issues to executive management until they are resolved.

Team Achievement:
The team was effective in generating timely feedback and follow-up on quality issues.
A detailed log of quality issues was generated after each meeting, and the product or infrastructure managers were required to follow up on these issues via email and before the next meeting. A new meeting will go over any outstanding issues, and then dive into the new issues.

What made it an effective team?
1. The team goals were clearly defined.
2. The team deeply cared about product and service quality, and customer satisfaction.
3. There was active participation, frequent communication and collaboration among the team members and management.
4. The product and infrastructure managers followed through on the quality issues, and resolved them in a timely manner.
5. The team took pride and enjoyed the moments when the quality issues were resolved.

What could have been done better?
When there was a change in senior management (a new VP took over products), his position on the activity and escalation of issues by this team changed. Thus, when issues were escalated, they were not resolved, ignored, or even challenged. Ultimately, the sales and service team who were giving their pro-active feedback began realizing the lack of follow-through from the product and infrastructure teams (owing to the change in guard). Hence, the team was eventually dissolved. Later on, the new VP realized this mistake, and created a new team to handle this.

Lessons learned:
What are the incentives for a new manager to re-invent existing processes?
Cost saving, the recognition from upper management, the recognition from clients, make an impact on existing processes by making them more efficient, cheaper or faster, to show that the experience they bring can take the company to the next level, better align processes to the company goals & objectives.

These are just a few examples from various segments of the industry on how effective teams deliver and execute, and innovate with creativity.

Creating Team Innovation - Chapter Three will examine forming such a well-functioning high performance team.

If you enjoyed reading this Innovation best practice, I recommend the complete list of Creativity Innovation Best Practices.

References:

eCornell

Six Ways to Find Innovation

How do you find Innovation? Can you find innovation blind-folded or using the same lens? Can you even look for Innovation? Or it just happens.

Innovation is coupled in some ways to imagination where every time you see something, you open your eyes to endless possibilities. Literally. According to Chuck Palus and David Horth, authors of The Leader's Edge: Six Creative Competencies for Navigating Complex Challenges, you need to “see with new eyes” in order to find innovation. We had discussed earlier on how leadership can drive innovation inside your business. We naturally fall into a habit of looking at things around us with the same eyes, analyzing it with the same logic and creating the same perceptions. It is easy to get used to this routine. Most managers act the same way. According to the authors, most managers “act on what they expect to see”, take shortcuts, do not spend enough time analyzing information and making a sound judgment. It’s as if the managers are walking around blind-folded since they have already created built-in perceptions of what they see.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Why is this so? We are after all living in the world of action. People get rewarded to get things done fast. And managers are no different. According to the authors, managers spend ninety percent of their time solving the problem, and only ten percent thinking about it. There is too much focus on getting the problem resolved quickly and moving on to the next problem. Perhaps this happens because of the sheer pace of work, multiple competing projects, approaching deadlines, and focus on quarterly results. The result: the problems are half-solved or worse yet, wrongly solved. The authors assert that "Complex problems — even really wicked ones — often begin to crack and shift when you spend more of your time looking at the problem."

What does all this have to do with Innovation?

Palus and Horth believe that Innovation happens when you begin slowing down (what did you say?), and when you put the brakes on the way you normally see and perceive, analyze and understand.

Here are the Six Ways to Find Innovation:

Stand in different places

Switch roles. This is the only way to learn and understand what is out there or in there. If you are the manager, become an employee. If you are in Sales, become a customer. If you are the product manager, become the product or the user. Try to adapt the mindset of who you want to do business with. Change your perspective. This bit of role playing will allow you to find new innovative ways to look at the same problem, and find a solution that you never thought existed before.

Use the lenses of other domains

Are you selling high tech gear? Well what if your buyer was shopping for groceries? How would you sell to that buyer? Are you looking to create that next big innovation in chemistry? What if you were to use this innovation in sports? Learn about something other than your domain knowledge. Try to apply this knowledge to your problem. Say you are trying to market an application to the CEO of a company, and are not able to determine the appropriate message, the punch line. What if a Kid were to buy your product? How would you explain to the Kid? The key is to use a different lens outside your domain and arrive at a solution. If you don’t know how to use a different lens, find someone in the company who can. Or create a group to do this.

Ask powerful questions

Questions are not just for the devil’s advocate and to create doubts. There is no such thing as a silly question. Question everything about what you are trying to accomplish. Start with why, what, how, when, what if, so what, where and so on. Ask broader or narrower Questions. Ask the question of a metaphor. Ask opposite questions and inside-out Questions. Ask precedence and consequence Questions. Ask ridiculous questions, and don’t forget to ask the “Real” question. Ask about object rules and action rules (Shank). Question the merits and even ask how you can make the innovation worse or fail. The more questions you ask and the more answers you try to find, the more innovative ways you would come across in trying to find a way to create a new product or solve a problem.

Foster new knowledge

New knowledge not only comes from your own domain, but when you are out there doing something else. Go attend a trade show of an unrelated business. This will open up your mind to how businesses are creating products for other markets. You may find an application of this in your market. Spend a week with your customer. Understand the problems your customer faces on a day to day basis; not just for your product, but everywhere else. Gain new insights on how your customer does their business with their customers. Check out what your key competitor is doing outside their place of business, what they are doing to promote and market their products. Do Offsites with your creative teams, and focus on learning something totally unrelated to what you are doing. Use the Offsites to create some group thought. The creative team should spend time in new places to gain new viewpoints, and which in turn will generate new ideas.

Create a visual verbal journal

A picture says a thousand words. A journal to put down your thoughts visually will allow you to think about your ideas from various angles, and create clarity of thought. Wherever possible, doodle. Do drawings of processes, tasks, relationships. Connect the dots or let them flow from one to another. Create a habit to write down key ideas, however unrelated, and try to associate these with real world scenarios. Create more pictures (don’t worry about whether they are pieces of art). Imagine the customer you are trying to sell visually. What would be they thinking out loud or saying out loud? Write short catchy phrases describing their actions and thoughts. At times you may be going on different tangents from your visual thoughts, but it is possible that one of the new tangents holds that all important idea to generate new innovation. And at times, the visuals may create even further complexity. Perhaps it is best to let go of that visual, and start a new one. Wherever possible, try to associate visuals with concise thoughts or ideas.

Change the pace of attention

How do you lead groups to find and create innovation? The key is to slow them down and try to get the group to focus on a few key ideas initially. Try to brainstorm on these ideas using creativity techniques such as free association, locksmiths, SCAMPER, or Question Breakdown. Ask the group to bring their own ideas, however silly they may appear on the surface, and evaluate each idea and brainstorm. Give rankings to each idea by having everyone vote. If the group is pressed for time, and is moving fast through the thought process, make it a practice of slowing them down. Ask more questions. Try to change the topic to have the group momentarily think of something else. Bring them back. Try to rephrase what you are trying to do. What you are trying is create is that moment of intuition or magic moment wherein group members can come up with an idea that everyone says “wow, let us explore that.” Use group forums or N-Gates to channel the group creativity into a new idea or innovation.

Are you ready to find innovation inside your business? Remember to slow things down, view the world with a set of new eyes, follow the six steps above, and unblock creativity and innovation within your organization.

If you enjoyed reading this Creativity best practice, I recommend the complete list of Creativity Innovation Best Practices.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

References:

CCL – Center for Creative Leadership. CCL e-Newsletter, October 2006: Needed: A New Way to See.

Leading Creatively: Acting Sensibly and Meaningfully in a Complex World by Charles J. Palus and David M. Horth (CCL & Jossey-Bass, August 2001).

Blocking Creativity and Innovation

Is your organization Blocking or Stifling Creativity? How do you harness Creativity and produce new Innovation in your organization?

As organizations grow, they setup structures that inherently block creativity.

Systems and Processes

Have your heard of organizational efficiency? Bottomline? Operational excellence? Larger organizations setup systems and processes to become leaner and more efficient, and become focused internally. However, when the systems and processes become an end goal, creativity that drives new innovations and competitive spirit becomes non-existent over a period of time. Hence, organizations must build new processes such as identifying and isolating key creative teams from the rest of the organizations, and stimulating them towards driving innovation.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Reward and Recognition Systems

Who do you reward and recognize at your organization? The operational excellence team, the sales team or the innovation team? Do you even have rewards and recognition systems in place? If you are frequently associated with rewarding behaviors like "going with the flow" and where behaviors like "questioning status quo" are ignored or even reprimanded, creativity will suffer. In order to create the best creative output from employees and teams, organizations must put formal rewards and recognition systems for the innovators and creativity contributors. Recognition and rewards could be in the form of a company-wide announcement of the contributions of your most innovative employees, press releases recognizing and introducing their innovations, providing the innovators paid vacations and combining them with trade shows where they can meet customers, salary bonuses, and more.

Organizational Culture

What stories do you hear in the cafeteria? Are the stories about the next big innovation that someone is working on, a new marketing campaign that is creating great returns or a product that was launched last year and became hugely successful? Or are the stories (or lack thereof) about improving profit margins, increasing productivity and becoming an efficient organization? An organization's culture is built on stories and legends. How many of these stories are known and recognized by the external world? An organization where creativity was not celebrated historically rarely has a vibrant creative environment. However, organizations where most talked about stories revolve around creativity, inspire others to follow suit, building a culture of creativity.

Creative ideas must make business sense. For instance, asking questions on whether you have the means to convert an idea into innovation, the associated costs of doing this, how many customers will use this new innovation, and the revenue potential. Most successful organizations achieve a balance between creativity and operational excellence.

Here are nine processes that you can create at your organization to unblock Creativity and drive Innovation:

• Open communication within and between departments, and across all management layers.
• Hiring of people with diverse backgrounds and experience, and avoiding "cloning."
• Encouraging employees to find new ways to do their daily work, and empowering them to make decisions.
• Creating an organization that extends out to customers, suppliers, partners, and environment.
• Stimulating research activities and providing employees some free time to experiment.
• Allowing employees to take measured risks (with small costs), and seizing opportunities.
• Creating processes to evaluate any idea on merit, regardless of where it is coming from.
• Identifying and separating the creative from operational functions in the organization.
• Using group creativity techniques frequently to promote team building and generate new ideas.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

If you enjoyed reading this Creativity best practice, I recommend the complete list of Creativity Innovation Best Practices.

Acknowledgements:

eCornell. Leading through Creativity Certification Training.