Michael Bills is an internationally recognized authority on top-line value creation and innovation, and his experience has taken him around the globe, consulting with world-class organizations on the process of innovation. He is the senior vice president and chief marketing officer at Select Comfort. He also serves as executive director of the Innovation Initiative at the Fisher College of Business at The Ohio State University in Columbus, Ohio. 

The Innovation Initiative prepares the next generation of business leaders for a new paradigm in innovation and provides OSU’s corporate partners with the latest practices, theories, and research related to innovation. Bills teaches graduate level and executive education courses on innovation and brand marketing, and directs research on the role of innovation process and methodology in the corporate environment.  

In this interview, he shares his insights on his work and the process of innovation with the Central Ohio ASTD Learning Executives Network.  

Q. How do you define innovation?

A. Innovation is about top-line growth through the creation of new products and services. For organizations to grow, it’s critical that innovation is very consumer centered. So this is about starting with the consumer or the end-user orientation, and understanding their wants, needs, and demands. Then with that understanding, you can start developing products or services for the market place.

Q. What’s the difference between invention and innovation?

A. Invention is about a new utility. But innovation is about a higher degree of emotional and rational resonance with consumers. A great example of that is the Sony MP3 player. It was really the first MP3 player that delivered music, long before the iPods of today. That Sony player was the invention.  

But along came the iPod, with its unique combination of the Napster-like user interface and the more intuitive, more operational design of the MP3 player. That really created innovation; it changed not only the industry, but people’s lives. That innovation improved their lives in both a way that was emotionally and rationally compelling.

Q. What attributes do innovative companies have in common?

A. This is an interesting topic, given the passing of Steve Jobs and all of the debate about his leadership. Clearly there are a number of traits that innovative companies possess. 

One is a bias for action. This is a belief that there’s a responsibility within the organization to constantly understand where their industry is going, how to stave off competitive threats, and how to exploit white space opportunities for growth for the organization.  

The way that manifests itself culturally is that the leadership is specifically much more open and much more transparent. Because they have a bias for action, they are much less risk adverse and more willing to celebrate experimentation and failure. They are much more likely to have qualitative incentives relative to risk taking―to understanding the overall competitive landscape―rather than simply the metrics of short term profit and margin. To be sure, innovators value those things as well, but this is really an additive set of skills that sets apart the more innovative organizations.  

Everything is really changing at the speed of sound. Those companies that are more nimble, that live in ambiguity, that are comfortable with change, that assume things will not stay the same, that don’t believe they are always right, or wake up every day trying to maintain the status quo are much better suited for this marketplace. 

Q. How do these companies approach innovation?

A. Innovation is definitely both an art and a science. The scientific aspects of innovation processes are every bit as rigorous as a company’s processes around operational excellence and efficiency.  

In much the same way that operational excellence and efficiency are not achieved by a company as an afterthought, but instead as part of a rather rigorous set of processes and activities, the same is true for top line growth and innovation.  

Innovation is a process that begins with what we call value creation. This is around ideation, around understanding the research inputs associated with consumer insights, of future foresights such as macro-geopolitical trends. There are also the scientific and technical capabilities, plus the core competencies of the company to keep in mind.  

All of those inputs are assessed holistically by a collaborative, heterogeneous, multi-disciplinary, trans-disciplinary team that works through any number of iterative processes to first ideate the opportunity, the possibilities based on what identified needs there are in their marketplace, and by their consumer.  

The second phase is value capture, which helps to commercialize an idea. This includes intellectual property, patents, and capital. It also includes managing a portfolio of innovation projects, risk management, and measurement. All of which help bring the concepts to fruition and then find a value delivery mechanism, which is the third phase.  

Value delivery takes into consideration specific styles of leadership, culture, and physical environments that help facilitate and encourage innovation. There is also the realignment of incentives, role expectations, and work methodologies. These are quite different from traditional environments where people work in relative isolation and are typically incented upon short term financial results. Instead, this is a whole series of soft and hard assessments, of both qualitative and quantitative metrics.  

This is very much a cyclical process and you draw it as such. It’s iterative and it’s continuous. So the minute you put an innovation out to the market place, the best businesses then continue to innovate against it. This mindset goes against of a lot of traditional businesses. In a business that is run through innovation, that innovation would have begun that next day. 

Q. How can organizational development and training teams become viable contributors to the innovation process?

A. Clearly for organizational development and training, or for any functions that are responsible for behavior, the value delivery phase is of great significance. This is where those groups can really help organizations to know and understand the concepts of innovation, and also to help put them into action. It’s very much about teaching leadership over the context of top line growth.  

I use a baseball analogy. The things you do on defense when you are playing baseball are very different than when you are playing offense. Your defense is your operational excellence teams, or your compliance teams. In most corporate organizations we are really good about teaching defense―how to catch the ball or how to stop the other team. But you’ve got to catch most, or all, of the balls that are hit to you in the field when you are playing defense, or you lose the game. It’s about protecting the bottom line.  

Consider innovation your offense. When you are playing offense and you are up to bat, you can miss a lot more balls before you hit a single, or a double, or a triple, or even a homerun. So you’ve got to swing for the fences. It’s about the top line. Because we are prone to defense, we have to flex more of our muscles on offense.  

The role of HR, organizational development, and training can really be to help organizations become more ambidextrous with regards to offense and defense, the top and bottom lines. This means taking calculated risks in a purposeful way, about creating cultures of failure and experimentation, about understanding when some variability is not only not a bad thing, but a really important thing.  

These groups can help the organization understand the definition of innovation, because it’s a term that is thrown around a lot. People assume they know what it means and very often they don’t. So we need to help people to understand that innovation isn’t about just soft skills, or a loose group of people that are novel or creative or have new ideas, but instead is a vital function in businesses.  

The best process for helping organizations to understand those departments’ roles in this is to start to identify and promote best practices within their business, and across the industry. The truth is, with very few exceptions, the best businesses in the world more often than not have either current innovation competencies that outstrip their competition, or they were founded on those principals and are riding the wave of their historic innovative process.  

So not just Apple, or Google, or Facebook, but Herman Miller, and W.L. Gore, and Hewlett-Packard, and any host of other organizations have made significant investments in innovation process and practice. It’s about helping those organizations understand innovation first and foremost, and then helping them to understand the value delivery mechanism for leadership. It really begins with leadership.

We talk about the three phases of innovation processes, beginning with value creation and captured in value delivery. But in execution, it really begins with a value delivery mechanism―having a culture, a leadership approach, hiring processes, incentives, and role expectations in place to facilitate and breed the other two phases of innovation.  

Q. What advice would you share with organizational development or training leaders on how they can foster a real culture of innovation within their teams?

A. First, if you are running a training and development team within an organization, you have a responsibility to help your team and the overall company to understand where the world is going. You need to become an advocate for this understanding that the world is changing. Markets are open, competitors are many, and choice is plentiful.  

Second, because innovation is really a requirement for a company to be successful in both the short and long term, there’s an enormous responsibility in leadership for helping the company understand that. You should be modeling or demonstrating that behavior with your teams―creating incentives for your team, financial or otherwise, that start to applaud new ideas about how we work and how we do our jobs.  

You need to continually encourage your team to develop collaborative skills. Everybody talks about collaboration, but is your team actually working together successfully? This is where they create ideas as a group that benefit everyone, where it’s more than one person’s idea, and the result is more than what they might have come up with as individuals. Knowledge is power, information is power. That’s still very much a true construct within a lot of businesses. Knowledge or information is only powerful if unleashed. The process by which to unleash that is collaborative and multidisciplinary. It’s the process of innovation.