A history of Innovation Engineering

from an excerpt from the upcoming book, Innovation Engineering, by Doug Hall

Innovation Engineering applies the system thinking of Dr. W. Edwards Deming to innovation, strategy and how we work together as an organization.  For those who don’t know of Dr. Deming here’s a quick overview. 

In the early 80’s the western world was under stress because of the invasion of higher quality products from Japanese manufacturers. 

The rise in Japanese quality was a result of applying systems thinking to the manufacturing of quality products.  They learned the systems thinking mindset from Dr. W. Edwards Deming, a statistician from Powell Wyoming. 

Japanese industry was so thankful for Dr. Deming’s contribution to their economy they named their national quality award, the Deming Prize.  The Japanese Emperor awarded him the Second Order of the Sacred Treasure in recognition of his contributions to Japan.  Shoichiro Toyoda, the first president of the Toyota Motor Corporation described Dr. Deming’s impact on Toyota this way: 

Everyday I think of what he meant to us.  Deming is the core of our management.
— Shoichiro Toyoda, First President, Toyota Motor Corporation

The television special featured Dr. Deming and the story of Nashua Corporation where the CEO, Bill Conway, had hired Dr. Deming to help him transform his company.   The TV special discussed Nashua’s success with applying Dr. Deming’s mindset to the company’s Carbonless Paper division.  It was a story I knew well, as my father, M. Bradford “Buzz” Hall,  had helped lead that project as Director of Central Engineering. 

The TV special would make Dr. Deming, at the age of 80,  the management “Rock Star” of the 1980’s.  He lead up to forty 4 day Deming Seminars a year, well into his 90’s, for up to 400 people at a time. His teaching of system thinking ignited the greatest change in how companies are managed in 100 years or more. 

More on the history of Dr. Deming’s work, can be found in the back of this book along with an interview with Kevin Cahill, President and Executive Director of the W. Edwards Deming Institute and grandson of Dr. W. Edwards Deming.  Additional information, including a link to the original NBC documentary can be found at the Deming Institute website www. deming.org.  

 

The Factory Represents
just 3% of the Opportunity

Dr. Deming’s teachings are classically packaged today under brand names such as Total Quality,  6 Sigma, LEAN and the Toyota Production System.  Each has had, and continues to have, a transformational impact on factories.  

However, the factory was and is but a small part of Dr. Deming’s vision.  In his book The New Economics Dr. Deming wrote that the factory represented just 3% of the opportunity for company improvement, “the shop floor is only a small part of the total.  Anyone could be 100% successful with the 3 per cent, and find himself out of business.”    He felt that 97% of the opportunity for improvement from applying system thinking lay in applying it to innovation, strategy and how we work together.  

Just as Dr. Deming taught leaders how to transform manufacturing quality from a random act to a reliable science.  Innovation Engineering teaches how to transform innovation from a random act to a reliable science. 

 

What Held Back Application
of Deming’s Work to Innovation

Applying system thinking to innovation struggled because of a lack of system data.  In a factory it’s easy to gather data from production equipment.  Innovation is more difficult because it involves the interactions of “human systems.”

To paraphrase Dr. Deming — much of what matters about innovation has been unmeasurable, unknown and unknowable.  The good news is innovation is measurable if you are willing to invest the time, energy and money to develop and validate methods of measurement. 

For over 30 years client projects at the Eureka! Ranch served as our a “laboratory” for conducting quantitative innovation experiments.   Two PhD’s and three statisticians measured people during the act of innovating.  We researched what separates successful from unsuccessful innovations.  The result is the largest quantitative data base on innovation system inputs and outputs in the world.  It’s real data, from thousands of real innovation projects, for the best of the best:  Walt Disney, Nike, Procter & Gamble, AT&T, Hewlett Packard and thousands of other companies large, medium and small whose names are not as familiar.  It is this quantitative database that makes the application of Deming’s work to innovation possible.

 

The Mission of the
Innovation Engineering Movement

The Innovation Engineering movement is a global community of innovation pioneers dedicated to System Driven Innovation.   Our mission is…

To Change the World through Systems that Enable Innovation
by everyone, everywhere, every day, resulting in
increased speed (up to 6X) and decreased risk (30 to 80%). 

 

Systems that Enable Innovation by everyone, everywhere, every day is the core of our mission.  It’s also the right thing to do.  Enabling factory employees to think and take action on ideas is the real secret to Toyota’s success.

William Hopper, co-author of The Puritan Gift explained to me that enabling employees was the key to the Japanese Miracle.

In 1961 when Sumitomo Electric Industries won the Deming Prize - they did it in a totally different way. Before their victory the winner’s quality efforts were driven by experts. Sumitomo enabled all of the workers to be a part of the process of quality.
— William Hopper, co-author of The Puritan Gift

The Deming prize committee in 1961 wrote of the win by Sumitomo...

One of the most important differences between Sumitomo Electric and other companies which have been awarded the Deming Prize is that in Sumitomo people from the top down to foremen worked together. This was an important difference from what happened in previous winning companies and may have contributed much to success.
— Deming Prize Committee, 1961

As Japanese companies enabled front line employees industry gains from Deming’s teachings grew exponentially.  Innovation Engineering is dedicated to the same kind of shift - from expert innovation “gurus’ to enabling innovation by everyone, everywhere, every day.   The result is a transformation in innovation results.

 

Increased Innovation SpeeD

Increased Speed is important if we are to take advantage of the opportunities created by today’s digital and global economy.  The good news is that order of magnitude increases in speed are possible. Digital tools and modern work systems make it possible to create, validate, manufacture and market more profitable products and services around the world faster then ever before.  

Decreased Innovation Risk

Decreased Risk is important given the epidemic of innovation failure that exists around the world.  Research finds that just 5 to 15% of innovations are successful at large companies.  Most business leaders would have a greater odds of success if they went to a Las Vegas casino and gambled their innovation investment on one big bet.   A slot machine would give them a 32% odds of winning, black jack 45% and roulette 47%.   

 

It’s easy to realize increased speed by accelerating projects without regards to risks.  Similarly, it’s easy to reduce risk by slowing down all innovations and subjecting them to never ending analysis.   

What’s needed is the combination of Increased Speed and Decreased Risk.  This can only be accomplished by changing the system of how we think, lead and work.

 

Why the Name Innovation Engineering?

The name Innovation Engineering precisely defines our purpose and mindset.

Innovation is about ideas that matter.   Creativity is the creation of the new and novel.  Innovation is about ideas that make a difference.  The difference can be new products/services, how we do our work or even how we ignite social change in our communities.

Engineering is about applied science.  There are many books and classes that preach the virtues of innovation.  Innovation Engineering is different - it’s a Blue Collar “hands on” collection of training, internet enabled tools and step by step methods for innovating. 

We teach theory so to provide background understanding.  Our education programs are primarily focused on how to innovate.  We sweat the details.  We work and rework each element of innovation until it is reduced to a reliable and reproducible process that can be documented in writing in an operational manual.  We tell students to start their innovation efforts by doing exactly what we teach.  When they develop confidence in their capability they then have a responsibility to help the Innovation Engineering community discover and validate even more effective ways to innovate.