Three-second summary: Historically, innovation has
been seen as a strategy. Rather, it should be seen as a dialogue, a
process. The home run innovation is less important to business success
than continuous innovation that touches all business processes. Innovation
is not a revolution; it is evolution and execution. It is the successful
implementation of creative ideas within an organization. It is about
challenging whether the business has the right business model. Consistently
successful organizations have clear processes around innovation.
In the business world, the distinction between innovation, value creation,
value extraction and operation execution is blurred. This has led to
the acceptance of a number of myths as conventional wisdom.
We have scoured the best thinking on business innovation and found some
consistent, albeit unexpected, themes.
Myth one: The breakthrough idea is key to innovation.
Rarely… We
can all identify companies that have become industry leaders due to a
breakthrough, transformational idea. We also know that these companies
are few and far between. Indeed, the established business models of many
organizations are somewhat less than optimal. Increasingly, executives
recognize that their companies’ long-term successes rest on the
ability to better understand future trends and to identify their impact
on existing operations and strategies. Their mantra is innovating
is better than waiting. Executives cannot move fast enough to find
the solutions they require in the constantly changing global economy.
They search for new ideas, methods and techniques. They create new experiments,
new pilot projects and new networks of collaboration. In short, they
are searching for seminal ideas that will drive transformational innovation.
This type of innovation is disruptive in nature. Disruptive innovations
either create new markets or reshape existing ones by delivering relatively
simple, convenient, low-cost innovations to a group of customers who
are ignored by industry. From a technological perspective, disruptive
innovation is most often the domain of small companies that are new to
a market. Typically, established companies will avoid disruptive technologies
and products that lower profits and, they fear, kill the market. This
opens the door to entrants who offer products that are simpler and less
expensive. Their success leads ultimately to a paradigm shift within
the market sector.
Disruptive innovation doesn’t just occur. It is messy and halting. Disruptive products
frequently take a number of years to realize their full potential. All
the while, companies must continue to hone their new business models
and innovate beyond their first products.
Disruptive innovation ultimately restructures the very essence
of what has existed previously. It reflects a change in the very nature
of an institution, concept, method or technique. The challenge for managers
is that while transformational change is essential to new growth, organizations
must not neglect their core offerings. Profits generated from the core
offerings are essential to fund initiatives leading to transformational
change and sustainable profitable growth. The key is to put in a set
of processes that can simultaneously balance disruption and attention
to the core.
Myth two: Creative chaos is the cauldron of innovation.
Creative yes, chaos no… With revenues of
over $10B USD and a market capitalization of some $150B USD (November
2006), Google is undoubtedly one of the most successful companies
of recent years. Google sees ambiguity, chaos and mistakes as fodder
for innovation. Mistakes, even million dollar ones, are part of the
learning, growing process.
Ah, but Google is the exception, not the rule. Research conducted
at the Industrial Performance Center at MIT reveals that two fundamental
processes are central to innovation: rational problem-solving and interpretation.
The former dominates corporate policy-making while the latter is the
source of much creative output. They are radically different from each
other and require different managerial approaches. Yet both are needed
to sustain the creative output of companies.
Perhaps a better example to follow is 3M, which has consistently innovated
into market after market through five generations of management. Founded
in 1902, the company is today a diversified technology multinational
with revenues exceeding $22.9B USD. Its history is characterized by a
constant stream of growth-generating innovations. Indeed, approximately
25% of its sales come from newly introduced products. A key to 3M’s
ongoing success is its 15% rule. Numerous employees are given 15% of
their time each day to devote to new growth opportunities. The company
funds trials for these opportunities with a broadly dispersed capital
budget. Internal and external selection processes follow. Ultimately,
every manager is expected to create something of substance. But it is
not chaos, it is focused creativity. The 3M example suggests that chaos
is not a stepping-stone to ongoing successful innovation; it is an obstacle.
Myth three: The Creative individual is the catalyst
for innovation.
Infrequently… It
is important for organizations to recognize the creative thinkers
in their midst and to take advantage of their deep insights. Creative
thinkers often bring meaningful ideas and new approaches to problems
bedeviling an organization. Yet promoting the creativity of individuals
within the organization as a way to foster growth is difficult
to manage and often inefficient.
More and more executives are realizing that no one process of strategic
and business planning will suffice. They are starting to bring together
the best minds from a number of fields to help them shape their future
innovation strategies. Their mandate is to focus on breakthrough opportunities
that are at the intersections of emerging technologies, markets and consumer
needs. Many things will have to be done simultaneously. We have to learn
to think differently. We have to be able to create new ways of economic
development, new ways of governing and new ways of learning. Successful
organizations need the whole organization to be mobilized, interconnected
and accountable. They must have a clear direction for innovation
that looks into the future. Indeed, some corporations are now looking
at a time frame of between five to 10 years.
Myth four: Only the young can innovate.
No… The
notion that innovation and creativity is the domain of youth is one that
has surprising durability. Employers show a preference for bright younger
employees with the very latest know-how. They frequently view older employees
as less productive, less flexible and less innovative; they also resent
their relatively high wages. However, there is a consensus among many
researchers that older individuals can, and frequently are, highly innovative.
One classic example is Steve Jobs. After losing a power struggle and
leaving Apple in 1985, Jobs founded Nextel and developed Pixar into an
animation power house. He then made a triumphant return in 1997, with
the ailing company becoming profitable in 1998. Now in his fifties, Job’s
genius for innovation continues to impress. After the highly successful
launches of iTunes and iPod, he announced in January at the 2007 Macworld
Expo the long awaited iPhone and AppleTV products.
As the Jobs example illustrates so poignantly, innovation is not a biological
gift of younger age groups. Indeed, the boomers, executives now in their
late careers, may be part of the most innovative and creative generation
the world has known, at least since the Enlightenment, some 300 years
ago. Innovators are making increasingly important contributions at older
ages. Wisdom often matters more than unbridled energy and experience
matters more than inspiration. Instead of focusing on the young, some
executives see diversity in hiring as a better route to bringing fresh
thinking into the organization.
* * *
Why are these myths so pervasive? Because they are intuitively appealing.
It’s easier to wish for the big breakthrough than to methodically
work toward greatness. We have worked with companies to build a successful
innovation capability – including process reengineering and appropriate
innovation metrics. It is hard work, but it is possible to transform
organizations into innovation machines.
Two-second profile: James is an accomplished consultant and media
executive with more than 25 years of experience in publishing, e-publishing
and information services. He has a successful track record in strategic
planning, business improvement and coaching. James has a Ph.D. in literature
from the Université de Montréal. He reads, writes and
speaks English and French fluently. |
