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Managing innovation in an on demand world
The birth of innovation—now and then
You have a fabulous idea...But it doesn't go anywhere in your corporation. You launch a product new to the market...But it's not compatible with most potential customers' existing technology.
What's wrong? Myriad factors: your direct reports don't know what to do with "disruptive" information; there's no knowledge-sharing system between divisions to capture intellectual capital and develop an idea; essential business units aren't involved in front-end strategising.
Managing innovation: it might seem like an oxymoron, but most truly great inventions today are the result of countless, intricate collaborations. Innovation is now systemic—it arises from complex interactions within a broad portfolio of competencies that include communications, technology, operations, and organisational self-awareness.
No longer is innovation a singular, linear trajectory from new knowledge to new product. Significant developments attributed to lone inventors like Thomas Edison are largely part of the past. The closed innovation model of independent, internally-oriented R&D departments solely generating ideas is nearly obsolete.
Managing the process—the new approach
Remember the old saying, "It's not the railroad business we're in ?it's transportation?"
Companies need to examine their businesses holistically and ensure their processes, people and technology are adaptable. An executive's best, most sustainable approach in driving innovation is managing the process to develop the strategy for a winning initiative. This is what builds enduring growth, lasting value, exceptional market returns, and powerful companies.
Successful businesses sense and respond and adapt effectively to shifting circumstances. These businesses excel at knowledge processes ?at discovering, generating, interpreting, analysing and implementing knowledge. Continually and in real time.
Corporate agility
The IBM turnaround is one of the business world's most extreme comeback stories, thanks to detailed strategic planning and execution—as relayed in former IBM CEO Louis Gerstner's all-out fittingly titled book, Who Says Elephants Can't Dance?
IBM's present CEO, Sam Palmisano, says, "Either you innovate or you're in commodity hell," referring to IBM's current reorganisational strategy to become more of a business consultancy. Big Blue cannot sustain itself as a technology supermarket ?not on those slender margins and with 316,000 employees worldwide.
3M, one of the most innovative companies in modern history, continues to focus on its processes. The company went from a successful independent R&D idea-generating program to a systemic approach that includes more direct links to management and a diversely skilled innovation team with a beats-the-odds rate.
Honda's focus on the technical excellence of four-cycle engines has carried it successfully from motorcycles to automobiles to a broad range of gasoline-engine products. Some of its management principles: make the most effective use of time; encourage open communication; strive constantly for a harmonious flow of work; and be ever mindful of the value of research and endeavor.
Identify the pieces and communicate
Innovation systems are only as strong as their weakest links. The processes need to be clearly understood and emphasised. "An execution culture is an edge culture," says recently retired Honeywell International chairman and CEO Larry Bossidy, who also wrote the book Execution: The Discipline of Getting Things Done. "Not everybody likes it. It's not comfortable. So when there's no emphasis on it, human nature being as it is, people go to the line of least resistance." Which means operating in their own familiar, customary way, based on their past experiences and assumptions.
In successful medium and large companies, the innovation process is documented explicitly via maps and charts, and implicitly communicated by words and practice. In nascent companies, the innovation process is often a part of the firm's tacit knowledge base. To grow substantially though, young firms must eventually make the core element of their innovation process explicit.
Analyse the moving pieces
Start backwards. In order to better guide innovation, keep in mind what it is: establishing, improving, expanding or extending something new, whether a process or service. And keep in mind the results: reduced time to market; getting into the marketplace before competitors; increased market share; improved product quality and customer experience; enhanced brand and corporate image; continued growth; an enduring company.
For synergistic and humming innovation management, deconstruct the various aspects of your organisation and consider how they relate to your strategic and tactical efforts.
- Culture. Does the leadership instill an environment conducive to innovation? How does the business environment affect the opportunity for innovation? Are doors and minds open?
- Strategy. How are corporate and business unit strategies developed? Which kind of ideas should be managed? What role does internal communication play in engendering motivation and strategic understanding? How are clients and customers incorporated into strategic development?
- Structure. Where do your company's innovative ideas tend to originate and develop? How does the chain of command affect decisions and processes? Are there unnecessary layers? Is there built-in collaborative input?
- People. Is the workforce diversely integrated? Are employees ever promoted without sufficient experience? Are employees' roles thoughtfully delineated and understood by direct reports? Are incentives created? Are contributions recognised?
- Processes. Where are the consistent gaps and bottlenecks in implementation? How is intellectual capital captured and shared? How is technology being used? How are teams developed?
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