Podcast

Innovation: An Essential Process for Engineering Excellence

In today’s episode, we are talking about innovation. When working with defense and space an innovative mindset is a must. But new opportunities equal uncertainty. Trying to solve a classified problem involves enormous risks in the innovative process of creating the solution.

Written by: Terma
Podcast Innovation

In today’s episode, we are talking about innovation. When working with defense and space an innovative mindset is a must. But new opportunities equal uncertainty. Trying to solve a classified problem involves enormous risks in the innovative process of creating the solution.

Among an endless list of definitions of what innovation is, today’s guest, Jacob Brix, sees innovation as a process. You find opportunities, elaborate them, test them, make them work, and get adoption. Innovation is continuously looking for new opportunities marketwise and technologically - finding the next invention worth pursuing.

Listen to this episode and get an understanding of the importance of innovation, what makes it hard, and why it is what makes Terma and other organizations continuously relevant.

Today’s Guests:

  • Innovations Specialist at Terma, Annette Skyt
  • Professor of Innovation and Management and Staff Manager at Aalborg University, Jacob Brix

Your Host: Mikkel Svold
Produced for Terma by Montanus

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Episode Transcript

Mikkel Svold:
Welcome to Allies in Innovation. I'm Mikkel Svold, and in this episode, we are talking about innovation.

Mikkel Svold:
And why is this interesting? Well, working with defense and space tech kind of requires it. So, we are going to talk about innovation, but we're going to do that later on, because first, I want to introduce my two guests. I've invited two guests who truly have innovation under their skin. And the first one is you, Annette Skyt. Welcome to you.

Annette Skyt:
Thank you.

Mikkel Svold:
Annette works as an innovation specialist at Terma and has more than 15 years of experience in working with innovation.

Annette Skyt:
Yes.

Mikkel Svold:
And my second guest is you, Jacob Brix. Welcome to you.

Jacob Brix:
Thank you.

Mikkel Svold:
And Jacob is a professor of innovation and management and is also a staff manager at Aalborg University Business School here in Denmark. So, today we'll discover what innovation is and why it's important and also why it's hard, and we'll dive into what can be done about it.

Mikkel Svold:
But I think, Jacob, maybe we should start out by defining what is innovation and also maybe what is it not, because I feel it could be misunderstood in many ways.

Jacob Brix:
It can also be a lot of things. And that is probably part of the many dialogues in many directions. But if I should narrow in your question, which I will allow to do, I could say that technological innovation, for example, it is often defined as a process with an outcome. And in this process, you will talk about the opportunity recognition. So, you need to recognize that there's an opportunity that can generate something good for us, technically. So, add value, right? Then you have to elaborate on that opportunity. So, it becomes some sort of a prototype you can try and see, does it work? Doesn't it work? Then you have the commercialization of it. And hopefully, and this is an important part, from my perspective, that you also have the adoption of it.

Jacob Brix:
So, it is a process where you find opportunities, elaborate them, test them, make them work, and get adoption. That would be the process definition of it. You could also say that there are many formal definitions. There are more than a thousand of them. But from my perspective, I would say it's a sad thing that they stopped with the patent.

Jacob Brix:
So, you can say that many talk about innovation as an output of a patent. So, we have many innovations you could say that are put in a shelf or something like that, but never adopted on the market. So, does it actually have the value intended that it is created?

Mikkel Svold:
But I think that the whole patent talk is a long talk.

Jacob Brix:
It is, yeah.

Mikkel Svold:
And it's actually something that could be very interesting in a future episode.

Mikkel Svold:
But I want to come back to, again, you're talking about tech innovation and also the bringing it to market kind of innovation, what other kinds of innovations do we have, and how do people talk about innovation if they're not like you deeply into the field?

Annette Skyt:
When you talk about innovation in a company context, you often talk about product development as well. And to me, that's mostly, you have a problem and you solve it. So that's problem-solving innovation. And what you also want to do, from my perspective in a company, is a more radical perspective, looking for new opportunities for the company, both market-wise, but also technologically, that you want to look for other opportunities and try to lift the eyes over the horizon a bit, and look in a slightly different direction, just for a little while, and then see if there is an opportunity there that could be worth pursuing for the company.

Annette Skyt:
And to me, that is extremely hard for the company coming back to your, why is it hard? That is the hardest part because when you have a problem, it's very well defined. But seeking for opportunities, that's chaotic and very fluffy and undefined, and that's difficult to work with, especially in a context where you are required to deliver something every day.

Jacob Brix:
You can also say that part of working with opportunities, you have a lot of uncertainty. Is it that technological uncertainty? What is it we need this thing to do? Is it market uncertainty, what the market wanted, et cetera. So, it's also different competencies and capabilities that are needed. For example, problem solving, there's a lot of risk. Does this work or not, if we try? With opportunity recognition, you have uncertainty.

Mikkel Svold:
So just to make it clear. So, we are talking about these two types of innovation. So, the problem-solving innovation and the opportunity recognition. And those are inherently different. Just briefly, why are they so different?

Annette Skyt:
Because I mean, from where I stand, the problem solving is well defined. You know that there's a problem and you know that it needs solving. You're not necessarily sure how to solve it, but do you know what that you should be... that there should be a solution. You go from one problem actually to one solution. When you do opportunity recognition, you go from a field and there could be many solutions. And then you afterwards have to choose or to look at which solution makes the most sense for our company. And what is the growth opportunity for our company?

Mikkel Svold:
Yeah. So, you're saying that could be many solutions, but also I guess there could also be many problems. Is that also how it's...

Annette Skyt:
Yes.

Mikkel Svold:
Yeah?

Annette Skyt:
Yes, yes.

Jacob Brix:
Yeah, because, I mean, when you're talking about technological innovation, for example, you have, well, the product. Does it need new functionalities? Should it have longer durability? That's one thing technological-wise. Another thing is the production of it. So is it the production process, innovation we are looking at where we always want to put on WD-40 and hope that it just makes a lot of increase in our revenue, but not necessarily each time we put on WD-40.

Mikkel Svold:
Which is an oil for...

Jacob Brix:
Which is an oil for mechanical parts. Yeah. But it's more to say that what we are talking about could also be framed as different kinds of learning processes. So, when we have something we know very well, we could talk about single loop learning. We are making small adjustments; we do what we know and more. We do what we know and more. And that's good because we are actually becoming better, and we can show and demonstrate that we are better.

Jacob Brix:
That is what you call the learning curve. For example, when we are talking about strategic or radical innovation, we cannot demonstrate in the same way, because we don't have something that is existing already. So, we need to develop something new. We don't have competencies. We don't have the language in the management team to talk about. I mean, what should we look after in three months to say if we are on the right path, this opportunity? What should we ask each other about in six months to find out, are we on the right path with this opportunity? Why does this make sense to our strategy? So, it is really two different management styles as well.

Mikkel Svold:
I think before we dive into that particular part, it kind of still segues back to the question, why is it important to innovate? Because it's also, I think for, I would say, the past, correct me if I'm wrong, like 15, 20 years, it's also been a buzzword that's been misused quite a lot.

Annette Skyt:
Yeah.

Mikkel Svold:
So why is it the innovation that we are talking about here, the opportunity-

Annette Skyt:
Finding.

Mikkel Svold:
... finding, and the problem solving, why are those important?

Jacob Brix:
Well, you could say that it is all about, at the end, making a continuously relevant organization. You want to have exploration and exploitation and create the balance, create the balance between exploration and exploitation.

Mikkel Svold:
What if the product that you sell just works and it's not necessarily something that needs to be changed? Is that a realistic business? Does that exist? Or is that just a thought…

Jacob Brix:
You could say that if we are in a company that is knowledge-based where there are developments internally, but also at the market, you might risk having knowledge at the end that is not relevant anymore because someone has created something new that is performing better or in new ways. So, in that way, you need to be continuously relevant. And that is not about keeping what we have. It's, of course, about improving it, but also looking for new opportunities. Because what is the function of what we are solving? Could it be done in a smarter way? And that is the kind of lock in with dependency, I would say. So, we are just following the same pattern.

Mikkel Svold:
And coming from obviously a tech and defense and also space company, I also hear that this is very knowledge-driven, obviously, and therefore you must always push, but how do you work with pushing innovation into the different processes and the areas of Terma? And why does it make sense also?

Annette Skyt:
Yeah. I mean, we do products that have a very long lifetime, 20, 40 years perhaps. And that means that the technology around it changes over time, and it changes more than the needs that we are solving. So, we need to be relevant with technology and innovate under the technology that is coming.

Annette Skyt:
That's one thing that's more of a problem-solving issue. But then if you want to create a completely different platform, solving the same thing that you are solving today, but you recognize that there could be somebody who's looking at it from a completely different angle to solve the same need. If you're talking about surveillance, for example, surveillance can today be done in numerous different ways. And to be relevant, we need to discuss, at least, is the way we are doing surveillance and doing sensors, is that the right way? Is that the right way to solve that challenge? Is there an opportunity out there that we have overlooked?

Annette Skyt:
If you look at, if I should do an example outside my own company, then if you look at electrical cars, they've been on the market for years and years and years, but it wasn't until somebody coming from the battery-

Mikkel Svold:
Industry.

Annette Skyt:
... battery industry that it actually took off and became a really hyped way of driving. So sometimes, you need to look in other places than what you're used to, because the technology or the new thing could be coming from there. And that's what we are talking about when we have one company that is looking in one direction, then it's sometimes difficult because you're doing, as Jacob said, and more, and it's sometimes difficult to look in other directions because you can't imagine them. So therefore, you sometimes need to discuss and think where else could it come from?

Mikkel Svold:
And I guess also, it'll be pretty important to stay updated on what is going on in the market, because one of the things, now you're talking about surveillance, one of the things that I know a lot of companies has been struggling with is including drone activity into their surveillance systems.

Annette Skyt:
Yes.

Mikkel Svold:
I know that Terma has a solution for that, but if you don't see that problem coming soon enough, I guess you'll be behind, right?

Annette Skyt:
Yes, exactly. Exactly. And then, I mean, the need for surveilling drones, for example, would then perhaps make a sensor that cannot survey drones obsolete, and the people will start buying from the ones that can, so therefore you need to stay relevant and that's, as you say, it's a technology that is coming to market that we need to be aware of. And yes, you need to be aware of it quite early in order to be able to have the solutions once the need evolves. And that's one of the things that is different from the problem solving. The problem solving, you know there is a need. And the opportunity finding, you're not sure there is a need yet.

Mikkel Svold:
So, which of the two would you, coming from a tech company, would you be working the most with, problem solving or opportunity finding?

Annette Skyt:
I think all companies are mostly working with problem solving. And the hard part is the opportunity finding, because it requires that you do something different than what you're used to. It is not necessarily efficient and that therefore, you need the management to back it, and to recognize that there isn't the need for opportunity finding and not necessarily just problem solving. And that's where the daily life can intervene with... interfere, sorry, interfere with what you're trying to do in a long term.

Jacob Brix:
You could also say that this is especially where you see the difference, and this might sound like sort of a provocation, but saying that there's a big difference between project management and innovation management, that many organizations are actually doing, and they're very good at it, project management.

Mikkel Svold:
Project management. Yeah.

Jacob Brix:
But they're using project management tools for the innovation, which often results in-

Mikkel Svold:
Sorry. Can you explain that a little bit more? How do you mean?

Jacob Brix:
Well, you could say that many organizations as … they have this kind of... We have all these kind of problems. We need to solve them, and then you identify new problems. So that's kind of this single loop learning process. And this is fantastic because this is where they actually improve products and production processes, logistics, and workflows internally. It's fantastic. It's the bread and butter of the company. It's for revenue, right?

Jacob Brix:
But this is also what can help pay, more or less, for the more curiosity you need to identify and elaborate these opportunities. But it is two very completely different ways of working. Because the one thing, as I said earlier, includes a lot of risk, but well-known variables. Can we see that this has, production process has improved with 2%, for example, yes or no? So that's a risk that we don't succeed in this, but you cannot say that when you are making an opportunity more elaborated.

Jacob Brix:
So why is it more elaborated now than it was three months ago? What have we paid for you? You don't have these measures, and everyone wants these measures. But the only thing we can measure is actually have we reduced uncertainty? Have we reduced this uncertainty we had before? And this is a completely new way of being a manager, of being an employee. And if you look at the research that has been conducted from the mid 1990s on this radical innovation and strategic innovation phenomena, many of these hubs that have been created in large established companies, they are more or less shut down after three to five years, because it takes a lot of time. And if they don't deliver something that can more or less go to market after two or three years, then it's not a success. Sadly.

Mikkel Svold:
So, the why innovation is important, the answer to that is basically to keep the company relevant. And therefore, also, to keep the company alive. And the problem-solving innovation is the bread and butter, you say, but how do you as management make sure that you also put time into innovating new ideas and finding new problems, I guess? How do you make sure to keep that balance? Because you say, the innovation hubs, the small labs all around, they're closing down after five years.

Jacob Brix:
Yeah. And the people in charge of them, they get a lower position than when they started because they haven't delivered right. So, the successful career path is not innovation, sadly. That's a provocation again. But if you can get what I'm saying between the lines here, if you want to deliver something that might show a success in seven years, why do we measure it as something we are used to, but where we can see success after two months?

Jacob Brix:
So that's what I'm saying, we need to have different management systems. But also managers with different roles ascribed, a new language. And a lot of research has been done to do this. There's a lot of research out there, but it's also just hard to study because you don't know when you start if it becomes a success or not. So, what are the... Well, you cannot say best practices. But we have a lot of stories looking back.

Jacob Brix:
So, if you look at research, for example, or you go to a network meeting with other managers, they will talk about why this became a success looking backwards. But if you ask them, "Okay. So now, if you imagined you were five years or six years back and looked onwards, why did it become a success?" They would just say, "We didn't know." It was full of uncertainty. So, we also have this kind of logic that, looking backwards, it was easy and clear, looking forwards, trial and error moving forward.

Mikkel Svold:
In your experience, Annette, how do you kind of implement that backward thinking, where you recognize past successes and project them into possible future successes, so you stay on track and keep innovating?

Annette Skyt:
That's extremely hard. And that's something that we are struggling with every day and something that we are trying to... I mean, as Jacob says, it's trial and error. So, we try to go a bit beyond some of today's applications and look there, and see, do we believe there's an opportunity here?

Annette Skyt:
Another thing that we do is look at new and upcoming technologies like additive manufacturing, or artificial intelligence, and all those kind of things, and say, "Okay, we know that there is probably an opportunity here. Let's explore it for a while." So that's the way that we... and that has management attention. But, as Jacob also said, if it doesn't deliver anything in three to five years, people get impatient. And that's not a good thing for the company, because it takes a long time to both recognize the opportunity, but also to develop something based on that opportunity.

Annette Skyt:
So, it would take probably 10 years from the very starting point, the first time you hear about it until you actually have something that is delivered. I mean, there are cases and small creations you can do on the way, but they're not necessarily what you build your next business leg or next business application on because you don't have that foresight. You just need to explore until you find something.

Annette Skyt:
And that's also why it's so hard, is because you can't predict the future, and that's actually what you're trying to do. But there are processes that you can use and there are things that you can do. And you also, as a manager, need to recognize that sometimes it fails. And therefore, I think that if you do it for a limited time, with a limited amount of people and kind of fence in the risk that you're taking there, then... I mean, it could fail, but then you haven't used very many resources and very much money on it. And then you can perhaps close that down and then start up something new or have three or four parallel things going on and saying, "Okay, one of these will survive," or something.

Mikkel Svold:
What are the processes that you apply in Terma to ensure leadership or management buy into your innovation processes?

Annette Skyt:
Innovation processes in this field, opportunity hunting, are very, very new. But that's kind of my job, to try to learn how does these processes function within the company. I come with a lot of knowledge from outside with processes, but how do you make them work inside Terma, for example? So, that's it.

Annette Skyt:
And we have the problem-solving stage gate model that everybody has, and that functions very, very well in very many ways. But when we want to do something completely new, it has some faults that can be solved with other approaches. And that's where we are trying to learn how to do that, basically.

Jacob Brix:
It's also about... I mean, there are many things in this. First of all, you can say that, what is the role of the top management team? Often, I mean, the order they have from the strategy, is that actually defined beforehand as a product you need to deliver on or is it longer out in the, what can you call it, the outcome chain? So, do they start with the why of our company in this product line is here, and then try to reengineer back to what could it then be that we are creating?

Jacob Brix:
So, I would also say the top management team has a big role here. Do they actually make a flaw defining what they think is the problem or the product that is the solution to the problem? Because, I mean, sometimes that might also be something that could be done from the innovation specialists, right?

Jacob Brix:
Another thing that is important here is also this kind of awareness, that when we are starting to do something new and if it becomes a success, we also need to talk about and think about this notion of leave, keep, learn. Because if you find the solution for something new, that is really brilliant, then a lot of the competencies you have, the technology you have, the platform, it becomes, in time, obsolete because something new takes over. So, there's also this kind of thing that if, in some organizations, if the word innovation comes out, some would say, "How many are getting fired?" Because you're cutting something off. But we just often forget to tell that we are also building something new that is even smarter, better because we want growth. But it's not always part of the story that is told.

Mikkel Svold:
But is that story unfair? Or is it also true, that innovation often brings layoffs?

Annette Skyt:
I think the misuse of the word is one of the things that we discussed earlier, is that innovation has also been towards efficiency. And if that efficiency has then created layoffs or something like that. So, it's not necessarily the innovation itself that creates layoff, but it might be the efficiency that comes with it.

Mikkel Svold:
Yeah, because efficiency in itself is the goal of the innovation.

Annette Skyt:
Yeah, exactly. Exactly.

Jacob Brix:
For example, if it is a production process, technological innovation, of course we don't want things to perform worse, right?

Mikkel Svold:
That makes no sense. Yeah.

Jacob Brix:
No. No.

Annette Skyt:
And what people... I think that, what managers sometimes forget is that, if you do set efficiency programs and call it innovation, then what you should be absolutely clear about is that the end goal, before we go, is either that we want to increase efficiency and we want to build a larger production so that... I mean, if you want people to participate, you want them to be secure and have the faith that they will keep their jobs.

Annette Skyt:
So, if you can actually build efficiency that everybody is happy about, it's also that they can go and do creative things in other ways. And that might create the room for what we're talking about, the opportunity finding, is that, if you're efficient enough in what you do in everyday life, then you can have some time to set off to do more creative things.

Annette Skyt:
And that's one of the things that I think we sometimes forget to say, is that, "Yes, it's true that if you become very efficient, then there's time that is idle. But that idle time should be used to put in to secure the future of the company." And that, to me, is one of the roles of the managers, is to say that particular sentence over and over and over again until absolutely everybody is believing it, and also showing it to you.

Jacob Brix:
It's about the outcome chain. So why are we doing this, having a manager being explicit about this? We are doing this because this and this and this could lead to this effect. But we are so focused. And I don't know if that's... and I'm sorry about this. If this is an engineering thing, we are just so focused on the process and output. But what is the outcome of the output? I mean, we often neglect that. Well, being a bit normative.

Mikkel Svold:
And in your experience, are managers, are they good at telling the story? And also, are they good at, once they have this idle time that you talk about, Annette, are they good at actually also reserving it for innovative processes or innovation opportunity discoveries? Are they good at that, Jacob, in your experience?

Jacob Brix:
Kind of a normative question. I would say it is hard if you do not have the experience to think and act innovatively. So, to say that there's a lot of research going on these phenomena called sense making and sense giving, for example, which is very much the human side of something with high degrees of uncertainty. And that could be innovation projects or large changes in organizations, if a new technology or technological platform is being implemented.

Jacob Brix:
I mean, do you tell the why and then go back? Or do you just say, "Well, we are having this new technology implemented, and we start next Monday. And, well, good luck. We hope for more efficiency." Okay, you have a sort of why. But it was a sort of, you know, "And we want a bit more efficiency. Thank you." But why don't you start with the why? That is something from my perspective, I would say, managers could be better at, generally speaking. But I cannot say, this organization, this organization, this organization, they do this and that.

Mikkel Svold:
And when you're talking about managers now, are you talking about top management or middle management or both?

Jacob Brix:
The interesting part here is that, well, you might have these big, you can say, seminars where you have a new strategy. The top management team is, "Here is the new strategy, and then make it work." But the interesting part is that, from a research perspective, you might actually have middle managers saying, "Okay, so what are we expected to do?"

Jacob Brix:
And the interesting part here is that, they could start a negotiation of meaning among them. So how do you interpret this strategy in your department? How do I interpret it in my department? So, their role is more or less to translate the fluffy vision of a new innovation strategy into something with their experience, their educational background, their vocational background, as well, to what becomes the kind of a search glasses you might put on for new opportunities.

Jacob Brix:
So, in that way, you can say that there is a big role in translating strategies into, well, opportunities we're going to look for. So which glasses do you create when you hear the strategy to your middle manager? I mean, are you also accountable for saying, "Well, we made this opportunity grow and elaborated it to a prototype because..." And then put it back to the strategy. I'm unsure if this is the logic or if it just starts up top and goes down, hopefully, to the market. So, what is the link actually?

Annette Skyt:
Good question.

Mikkel Svold:
Yeah. Yeah.

Annette Skyt:
I'm not sure I understand what you're asking. If you're asking any anything specific.

Jacob Brix:
I'm trying to say that, for example, organizations, they might say, "Now, we have this new innovation strategy." And then, "Make it work," down to the middle management, to the different departments and divisions, they should create something that is related to that. Do we actually talk about why the things we create is part of the strategy? Or, do we run with the idea we have that we prefer ourselves, and then we hope at the end we can be accountable for it fits with the strategy? For example, if it's sustainability, that's a hot topic, right? Do we remember all the way through that we need to be sustainable in all aspects? Or was it just one thing and then the rest became not sustainable? So, it's just more of this kind of logic that is going on when the order is made.

Mikkel Svold:
And what can you do as top management to control that or to diminish uncertainty, I guess?

Jacob Brix:
It would be communication about the why, why are we doing this? And then, make people reflect or talk about, explicitly, why do we think that this opportunity could be something that is relatable to our strategy? And my experience from my own research is that, this is not often the case people talk about. Sometimes engineers, the opportunity, because at the beginning, it was sustainable, for example. But do we keep having this strategy into focus with all aspects around the idea when we elaborated? I'm not sure.

Mikkel Svold:
Okay.

Annette Skyt:
Well, I think that is a general problem that I've experienced also in other places, than in Terma. But the why is not necessarily communicated very well. And I think that, partly, that is because, when you're discussing whys, you are a certain group of people and then you are aligned about the why, and then you are a bit further on the journey than the people that you're going to communicate with. That's also a part of change management, for example, is that, you sometimes forget to say why are you doing it, because you are already a few steps ahead of who you're trying to talk to.

Annette Skyt:
And that's the same thing in innovation also is, you have the notion that there's a good opportunity out there, but you sometimes forget to define the why because it's implicit that the why is there, and therefore, people kind of sometimes react with the barrier because you haven't discussed the why with them, because you're already ahead. And that's in all levels.

Annette Skyt:
To me, it's very important, both to say, why are we doing this, but also, what is the task that you're actually wanting to do. Is it a completely new product that you are looking for? Is it a completely new market? Is it something that is making things more efficient for the current one? All of that is not necessarily communicated or at least perceived very well and well enough at all levels in an organization. And therefore, I think, sometimes you have these things that you think you're going in the right direction, but you're not because the why was not necessarily there from the beginning.

Jacob Brix:
Thank you for clarifying my monologue with that. But I would say, one of the problems that is associated with exactly what you say is that, when we then have innovation projects and the management comes to these meetings to talk about what is working well and not so well with this, we often see scope creep.

Mikkel Svold:
What does that mean?

Jacob Brix:
That means that, well, we know that we said that this was what we wanted to have, but now we want more. And that implies that you actually have to go back and rethink what you have developed to include new stuff. And that is also kind of the problem that when you're working with high degrees of uncertainties, often, meeting the management team who is the decision team, right, they would ask for more, and you've just spent a lot of time to cut away things that are perhaps important. But you want to be more and more narrow in what is the idea here. And often, that is why it also takes a lot of time because new people, fresh eyes, you could say, looking at the problem. So, scope creep, that is when you have something that is very fine developed, and they're asking you to make it broader. Then we go back and work again.

Mikkel Svold:
And is that, I could see that as a typical problem, especially in the tech area.

Annette Skyt:
It definitely is. Yeah.

Mikkel Svold:
Because the technological, the general technological development is just so fast. So, once you've narrowed down your problem and your solution, well, the world has happened.

Annette Skyt:
Yeah, exactly.

Mikkel Svold:
How do you tackle that?

Annette Skyt:
That's a good question as well.

Jacob Brix:
They have more meetings.

Annette Skyt:
That's one of the things. But you also have to, at some point, you need to say, "Okay, this is the final solution. And then we will do a midlife update of a product," for example because the life length of our products is 20 years so it's going to happen, that there's going to be technologies that were not there yet when you come 10 years out, and then you do a midlife update of some part of a product, for example. So that's part of... one of the ways of doing it. But that's doing and more, and efficiency on what you already have. If you want to look at completely different direction, then you need to kind of go back a step and say, "Let's..." If we wanted to solve that need out there today, what would we do from the very beginning? If we had all the knowledge today and we had the same need, how would we do it differently?

Mikkel Svold:
That move is, seems to me to be incredibly hard, because you're already very invested in what you've already done.

Annette Skyt:
Yes, definitely. And it creates a lot of barriers inside, also, because you are actually challenging people on their knowledge of what is working and what is not working. And there are a lot of... People have, of course, they've thought about some of the things here, and they've also sometimes investigated it and found out that it was not possible. And then you need to challenge that knowledge. Well, it was not possible, but that's maybe five, 10 years ago that it was not possible. Is it possible today? So that's one of the things that is very important, that keep that curiosity alive. Keep that curiosity.

Mikkel Svold:
And keep looking up as well, right?

Annette Skyt:
Yeah, exactly. Yeah. Yeah.

Mikkel Svold:
I want to shift the conversation a little bit because there's something that we talked about in our meetings before this podcast episode, before recording. And one of the things we talked about was, whether to have an innovation team as, I'm going to say, nearly a separate department or like a separate team, or to have your innovation happening in the current departments as something that is already in the track, because there're pros and cons of both, I guess. And maybe, Jacob, you can try to highlight some of the pros and cons of having a separate team, doing the innovation and then implementing into operations, or to have innovation inside operations.

Jacob Brix:
Well, if you talk about technological innovation, for example, you would say that, organizations that have departments or centers where you are excelling both at exploration and exploitation, you know that is innovation but also operations at the same time, they are the high performing units. They perform extremely well, because they know what is our product, what is our production process, what is the logistic, what is the business model, Everyone is aware of it. And then everyone can technically also chip in. "Oh, I just thought about this. Let's try to do this and that." So, when you have something that is within, it is extremely good for this incremental innovation or single loop learning that we talked about earlier.

Jacob Brix:
If we want strategic innovation or radical innovation, that is creating something that is extremely new, you can put a percentage on it if you want to, then you often see that organizations who have centers that are R and D isolated from the operations, they perform much better. But there is a caveat, you could say, because if that R and D department is not well connected to the operations, they might have this problem of not invented here syndrome, which implies that the operations and the management team and operations, they might be kind of reluctant to say, "What is this? And why is it, this is better than what we have been used for many years."

Jacob Brix:
And so, to say, so in one way, if you want strategic radical innovation, the research would say that the division split is good, because then you have a management team that is innovation oriented. They know to talk about innovation. They might have measures for it. To some extent, they know that it takes a lot of time.

Mikkel Svold:
And I guess, they're mentally in that track all the time as well.

Jacob Brix:
Yeah. But they're not in operations.

Mikkel Svold:
Yeah.

Jacob Brix:
And vice versa. So, the transition of new knowledge from R and D to operations is very hard. And therefore, you need liaison officers, or you need people from the operations to be part temporarily of the innovation team you have. So, in that way, you can say that the way you have structured the organization can actually both enable but also disable innovation to happen. But, I mean, this is technological innovation we're talking about here.

Jacob Brix:
So, the grass is often greener at the other side. And people also talk about matrix structures, right? Because, oh, we want to be very good at operations, but we also want to be very good at innovation. Okay. The advantages and disadvantages with the split setup and with the combined setup. But now, we just see more and more organizations work in teams, and it has a very high... the matrix structure, it has a very high coordination cost. And if someone gets ill, it might imply that we get a lot of waiting time because one person with a lot of knowledge and competencies that was... the hours was put aside for right now, we might need a project to stall for three to five weeks. So again, advantages and disadvantages. I don't know if I'm answering your question, but I'm giving you a lot of reflection.

Mikkel Svold:
Yeah. Yeah.

Annette Skyt:
I think that one of the main issues about doing it in a single department is that fires, putting out fires, addressing customer needs, all those things that are daily life, have a tendency to take over all the time. So that it gets priority over what is on the long side, on the long run. And if you're not careful, it gets all the priority. So that there's no time for-

Mikkel Svold:
Yeah. So, putting out fires get all the priority?

Annette Skyt:
Yeah, exactly. So, there's not time to lift your eyes and look out in the future.

Mikkel Svold:
And this is if the innovation is part of each division or of operations in itself?

Annette Skyt:
Yeah. Yeah. Yes. Yes. And as Jacob said, on the other hand, there's the transition that is, if it's done in a small team, in a small department, then there's the transition of going from the weirdos in the corner to the head of the operations. I'm probably offending somebody in my own organization.

Mikkel Svold:
I'm guessing yourself. Yeah.

Annette Skyt:
Yes, me. But, that's one of the things that we are trying in Terma right now, is to put together a small team for a short period of time, with a limited amount of money and see what can you do. And they're from different places in the organization. It's still a struggle to have them free of daily operations, but at least we have some kind of group that is working on this single issue and this single task. And as far as we can get the calendars aligned, get outlook to work with us, then that's actually, seems to be a way of working.

Mikkel Svold:
I think it was you who said that the biggest obstacle to innovation is outlook.

Annette Skyt:
Yeah. I said that.

Mikkel Svold:
Is that right? Yeah. You said that, Annette.

Annette Skyt:
Yeah, that was as a quotation from somebody else. But I think there's truth in it, that both the team that is working on it has difficulties finding the time. But especially when you want to get to a decision point and get the people that should do the decisions, get them to participate and prioritize that, now, we are going to go further and it might imply that you need to do more funding. And so, that's also a challenge.

Mikkel Svold:
And I think that is a perfect segue, because our time is actually, it has run out. But it's perfect segue into what we'll talk about in the next episode, where we'll talk about how to make experts or like deep experts in their own fields work together. And I think that's going to be super exciting as well.

Mikkel Svold:
So just before we round off, where can listeners... where would you recommend listeners go if they want to know more about this topic, or maybe follow what you do? Jacob, do you have any suggestions?

Jacob Brix:
Well, I could. Well, from my personal perspective, do some self-promovasion, saying that the most of the research I'm doing is open access. So, if you just search for Jacob Brix, I mean, you could find something on radical innovation, but also sustainable innovation and if you want to read about it... but, of course, it would be for some people these boring academic papers. But I mean, there are also some very good YouTube videos you can see if you are busy and you would like to, for example, while driving the car, have something to listen to …

Mikkel Svold:
Don't look at YouTube while driving a car.

Jacob Brix:
No, no, no. Of course, I would never recommend. But if just the sound. I mean, if you search for radical innovation, one of the best places in the world is... well, at least one of the best people I know with radical innovation is Professor Gina O'Connor, and she has made a lot of online material you can listen to and also see if you want to. And she's the expert, if it's, you know...

Mikkel Svold:
And we'll of course put a link to that in the show notes on the Terma website. And to follow what's happening at Terma, where should we look?

Annette Skyt:
Into the future?

Mikkel Svold:
Into the future. That's such a good question. I'm going to close you down on that one. That's a perfect question.

Mikkel Svold:
All right. Let's wrap it up. It's been super fascinating. And I just want to say... yeah, I'm just looking at my paper here. Annette Skyt and Jacob Brix, thank you so much for joining the talk. And to you...

Annette Skyt:
Thank you for having us.

Mikkel Svold:
You are very welcome. And to you, this listener, we'll have all the links to what we've talked about in the show notes, like I just said at terma.com. And if you like this episode, I want to remind you to hit the subscribe button, because it will actually help quite a lot in spreading this podcast around to make it accessible for more people. So, rate and comment, hit the subscribe button, and we'll make sure to give you the coolest insight possible. Thank you so much for listening.