Why innovation makes executives uncomfortable
I've been working in the "innovation field" for over seven years as a consultant, and I did regular "innovation" work for a number of years previously, so it is with a bit of chagrin that I come clean on the fact that it finally occurred to me why innovation makes many executives uncomfortable. I think if you are constantly reinforcing a belief system (innovation is good!) that it can be very hard to get a different perspective, and even understand why that other perspective exists. So for years I have labored under the assumption that others saw innovation as a valuable capability and commodity, just as I did.
Over the last few months I've been disabused of that notion, by working with executives and others who helped me understand why innovation makes them uncomfortable. And let me say my conclusions about why innovation makes executives uncomfortable surprised me a bit as well.
I've struggled with this, because I'd like to create a nice, neat taxonomy about the barriers for innovation. So far I have three categories or typologies, but as you read this, feel free to contribute your own in the comments section. I'd be interested to hear what you think. Recognizing there are several different kinds of reasons that innovation makes executives uncomfortable may help you become better at answering their questions and resolving the constraints on innovation in your business.
The first typology is based on the belief that innovation requires skills that the business doesn't have or reinforce. On the surface, this may seem obvious. Innovation seems to be about incredible breakthroughs in research, or insightful observations about customer needs and wants in the future. But when you really break it down, innovation requires a different set of skills from those we inculcated in our organizations. Here's a simple dicotomy:
Innovation requires ART not SCIENCE
Innovation requires QUALITATIVE insights not QUANTITATIVE statistics
Innovation requires HUNCHES not FACTS
Innovation requires RISKS not CERTAINTIES
In other words, we already have all the skills we need in order to innovate, we just don't emphasize or rewards those skills. Innovation is still much more of a craft than a science, more artisan than automaton.
However, many of our executives were bred in the scientific management school of thought, which requires breaking down actions and phases of work into minute detail and describing and optimizing the action. As Brownian motion fans can attest, you can be certain of the location, or speed, of a particle, but not both. The same is true of these innovation skills - they are important, but can't be scientifically managed.
The analogy would be a kindergarten taught by quant jocks. The kids wouldn't have any fun, being forced into doing very specific and rigid tasks, and the quant jocks wouldn't like the freeform play and idea creation of the kids.
The second typology is based on the fact that innovation is fairly unpredictable. This is increasingly true as the amount of disruption possibility increases. Again, we have executives who have been taught to believe, and their compensation reinforces, that businesses are organizations which produce regular, steady outcomes in the face of any environmental uncertainty or economic chaos. Innovation doesn't work to our clocks or schedules, ideas and needs arise as customers preferences and situations change. Few executives are interested in the change inherent in really disruptive ideas, even if they have a substantial increase to the top or bottom line, because of the amount of change those ideas may introduce, and the ancillary effects of those changes. Most executives would happily trade regular, consistent growth in the low single digits to wild swings in growth based on occasional disruptive ideas.
The analogy in this instance is to a baseball player. Most managers would prefer a hitter with a .300 batting average who hits singles and doubles, over a .275 hitter who hits homers or strikes out.
The third typology is based on the fact that innovation ultimately places someone else in control. Many senior executives kid themselves that they are responsible for the success of their businesses. We are guilty of admiring people who make the cover of Fortune or Forbes, only in hindsight to wonder what we were thinking. Anyone remember Chainsaw Al for example? It is their insight, strategies and leadership that makes all the difference. In a fast paced, ever changing world, executives who create a vision and then engage the best in their people will be successful, but they must abdicate some of the decisions to those people. Innovation is rarely the provenance of one individual. Apple is probably the exception that proves the rule that most organizations have tens, if not hundreds of individuals actively involved in innovation. Yet the more innovation that happens in an organization, the less control the CEO has about products, and strategy, and direction. Unless, again like Apple, everyone understands with great clarity the strategy and goals and direction, and innovation is completely governed by that vision. Since most organizations lack that central clarity, innovation becomes rapidly dispersed throughout the organization, and the senior executives have little control. Therefore innovation is tightly controlled if allowed at all, since too much innovation may mean the loss of control.
So, to recap, I've found that innovation makes executives uncomfortable for at least three reasons:
Additionally, I didn't use one I know to be true: in this environment, there's much more to be gained in cost cutting and right sizing than in innovation, since cost cutting has an almost immediate return to the bottom line, whereas innovation has at best a possible return down the road.
The reason I didn't include that alternative is that while it is true, it can only be true for so long. A firm that cuts 5% of its cost base every year will shrink to nothing in less than 15 years. Eventually, every firm needs new product, services and offerings to grow. So this is only a temporary reason not to innovate.
So, that's my typology. I'd be interested in your thoughts. Also note that once you can get past the "we don't have enough time" or "we don't have enough money" arguments, understanding which of the other reasons actually block innovation will give you an opportunity to create evidence to reduce the concerns for each of the three typologies, which you'll have to produce in order to innovate.
Over the last few months I've been disabused of that notion, by working with executives and others who helped me understand why innovation makes them uncomfortable. And let me say my conclusions about why innovation makes executives uncomfortable surprised me a bit as well.
I've struggled with this, because I'd like to create a nice, neat taxonomy about the barriers for innovation. So far I have three categories or typologies, but as you read this, feel free to contribute your own in the comments section. I'd be interested to hear what you think. Recognizing there are several different kinds of reasons that innovation makes executives uncomfortable may help you become better at answering their questions and resolving the constraints on innovation in your business.
The first typology is based on the belief that innovation requires skills that the business doesn't have or reinforce. On the surface, this may seem obvious. Innovation seems to be about incredible breakthroughs in research, or insightful observations about customer needs and wants in the future. But when you really break it down, innovation requires a different set of skills from those we inculcated in our organizations. Here's a simple dicotomy:
Innovation requires ART not SCIENCE
Innovation requires QUALITATIVE insights not QUANTITATIVE statistics
Innovation requires HUNCHES not FACTS
Innovation requires RISKS not CERTAINTIES
In other words, we already have all the skills we need in order to innovate, we just don't emphasize or rewards those skills. Innovation is still much more of a craft than a science, more artisan than automaton.
However, many of our executives were bred in the scientific management school of thought, which requires breaking down actions and phases of work into minute detail and describing and optimizing the action. As Brownian motion fans can attest, you can be certain of the location, or speed, of a particle, but not both. The same is true of these innovation skills - they are important, but can't be scientifically managed.
The analogy would be a kindergarten taught by quant jocks. The kids wouldn't have any fun, being forced into doing very specific and rigid tasks, and the quant jocks wouldn't like the freeform play and idea creation of the kids.
The second typology is based on the fact that innovation is fairly unpredictable. This is increasingly true as the amount of disruption possibility increases. Again, we have executives who have been taught to believe, and their compensation reinforces, that businesses are organizations which produce regular, steady outcomes in the face of any environmental uncertainty or economic chaos. Innovation doesn't work to our clocks or schedules, ideas and needs arise as customers preferences and situations change. Few executives are interested in the change inherent in really disruptive ideas, even if they have a substantial increase to the top or bottom line, because of the amount of change those ideas may introduce, and the ancillary effects of those changes. Most executives would happily trade regular, consistent growth in the low single digits to wild swings in growth based on occasional disruptive ideas.
The analogy in this instance is to a baseball player. Most managers would prefer a hitter with a .300 batting average who hits singles and doubles, over a .275 hitter who hits homers or strikes out.
The third typology is based on the fact that innovation ultimately places someone else in control. Many senior executives kid themselves that they are responsible for the success of their businesses. We are guilty of admiring people who make the cover of Fortune or Forbes, only in hindsight to wonder what we were thinking. Anyone remember Chainsaw Al for example? It is their insight, strategies and leadership that makes all the difference. In a fast paced, ever changing world, executives who create a vision and then engage the best in their people will be successful, but they must abdicate some of the decisions to those people. Innovation is rarely the provenance of one individual. Apple is probably the exception that proves the rule that most organizations have tens, if not hundreds of individuals actively involved in innovation. Yet the more innovation that happens in an organization, the less control the CEO has about products, and strategy, and direction. Unless, again like Apple, everyone understands with great clarity the strategy and goals and direction, and innovation is completely governed by that vision. Since most organizations lack that central clarity, innovation becomes rapidly dispersed throughout the organization, and the senior executives have little control. Therefore innovation is tightly controlled if allowed at all, since too much innovation may mean the loss of control.
So, to recap, I've found that innovation makes executives uncomfortable for at least three reasons:
- A different set of skills are required than are supported or reinforced
- Executives prefer humdrum predictability to wild swings in revenue and profits
- The more innovation, the more likely the executive team is to lose control of the business
- Innovation costs money
- Innovation takes resources
Additionally, I didn't use one I know to be true: in this environment, there's much more to be gained in cost cutting and right sizing than in innovation, since cost cutting has an almost immediate return to the bottom line, whereas innovation has at best a possible return down the road.
The reason I didn't include that alternative is that while it is true, it can only be true for so long. A firm that cuts 5% of its cost base every year will shrink to nothing in less than 15 years. Eventually, every firm needs new product, services and offerings to grow. So this is only a temporary reason not to innovate.
So, that's my typology. I'd be interested in your thoughts. Also note that once you can get past the "we don't have enough time" or "we don't have enough money" arguments, understanding which of the other reasons actually block innovation will give you an opportunity to create evidence to reduce the concerns for each of the three typologies, which you'll have to produce in order to innovate.
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26 Comments:
Fascinating, Jeff (almost as fascinating as "Pulp Innovation", LOL but that series is one I recommend all the time) -
A few thoughts on your "three"
1) Kindergarten done right is actually pretty scientific but it's a VERY different science. Learning how to learn (& how to learn different ways) requires a lot of attention, but a light hand by teacher. The constructivistic model is vastly superior in early childhood - but it focuses less on what we know and more how we know it (knowledge structures vs knowledge content. The parallel here is organizations & their leaders need to get a deeper look at how their people think.
#2) I love the baseball analogy, Jeff. Are you familiar with the sabermetric revolution in baseball? Many of the most beloved stats are, um, misleading. Batting average, RBI & ERA are crappy at predicting anything. But better stats have surfaced (WAR, VORP, Win Shares, etc.) and permit the intelligent organization to better manage personnel & in-game decisions.
[to your example, if that .275 HR hitter also gets walked a lot, his value to the team may be MUCH higher, eg slugger Adam Dunn who has low BA but very high OPS]
Maybe what we need in innovation are better metrics. If managers use plausible, well-accepted metrics that lack predictive validity... maybe folks like us (you, me, your readers) should be developing the kind of metrics that are truly predictive!
3) it's very hard for the leaders of even small firms to establish a pervasive vision. (We all know it's hard enough to delegate even then.)
Maybe we need to train people to do exactly that? (Who's doing that now? I urge you to read the new The Atlantic article by Tim Kane [Growthology blog] on the military... or why the Army's loss is organizations' gain.
Thanks for the provocative post - a great one to start off 2011!
Norris
norris.krueger#gmail.com
Fascinating, Jeff (almost as fascinating as "Pulp Innovation", LOL but that series is one I recommend all the time) -
A few thoughts on your "three"
1) Kindergarten done right is actually pretty scientific but it's a VERY different science. Learning how to learn (& how to learn different ways) requires a lot of attention, but a light hand by teacher. The constructivistic model is vastly superior in early childhood - but it focuses less on what we know and more how we know it (knowledge structures vs knowledge content. The parallel here is organizations & their leaders need to get a deeper look at how their people think.
#2) I love the baseball analogy, Jeff. Are you familiar with the sabermetric revolution in baseball? Many of the most beloved stats are, um, misleading. Batting average, RBI & ERA are crappy at predicting anything. But better stats have surfaced (WAR, VORP, Win Shares, etc.) and permit the intelligent organization to better manage personnel & in-game decisions.
[to your example, if that .275 HR hitter also gets walked a lot, his value to the team may be MUCH higher, eg slugger Adam Dunn who has low BA but very high OPS]
Maybe what we need in innovation are better metrics. If managers use plausible, well-accepted metrics that lack predictive validity... maybe folks like us (you, me, your readers) should be developing the kind of metrics that are truly predictive!
3) it's very hard for the leaders of even small firms to establish a pervasive vision. (We all know it's hard enough to delegate even then.)
Maybe we need to train people to do exactly that? (Who's doing that now? I urge you to read the new The Atlantic article by Tim Kane [Growthology blog] on the military... or why the Army's loss is organizations' gain.
Thanks for the provocative post - a great one to start off 2011!
Norris
norris.krueger#gmail.com
Great post. As someone whose innovative tendencies were stifled by a corporate culture, I can recognise them all too well. I think the 'control' issue is actually an additional part of the typology. Innovation requires FREEDOM and managers are bred to CONTROL. It's one of the reasons innovation happens better in small companies - they dont have the luxury of having managers whose job is to control - they necessarily take risks and have freedom to innovate to succeed.
Fine article, thank you. I would, however, strongly encourage a reconsideration of the absolute "either/or" noted for many parameters in the article.
Most innovation requires a significant "both/and" focus in order to innovate - purpose and contex - and successfully apply the results.
Of course, my experience is loaded from an architectural services background, where each design/document/implement project requires "both/and" and benefits from that need.
Certainly, managers can stifle any aspect of their business, not only "innovation". Cross-fertilization with other disciplines can lead to success.
I also recommend Roger von Oech's classic books, "Whack in the Side of the Head" and "Kick in the Seat of the Pants" (find him on-line at www.creativethink.com )to anyone desiring a better understanding of the creative process - again, in any field of endeavor - and the multiple roles we each have to fill in it.
No one can delude themselves into thinking that they are "only" and executive, manager or employee.
Please keep up the intriguing and helpful dialogue!
I also use the analogy between an NFL quarterback and business. I am in the communication business so we use a lot of sports analogies.
If you notice really,really, great NFL quarterbacks' interception percentages are higher than ho hum QB. Why is that? YOu have to take risks,to "innovate" if you are going to be exceptional in any form of business. Great article. thanks k
I think the answer lies in having an 'Agile' mindset and approach.
Great post. My one possible addition is the "vision thing" (not its current use, which is yet another bastardization of a worthwhile concept like "mentoring" and "networking").
The default look into the future is to simply extend the present. In fact, most executives are trained to ignore any other way of looking ahead. As Clayton Christensen pointed out, victims of disruptive technologies know they exist and perhaps even investigated them, but were never able to factor them into their rigid trend line..
I'm not sure what to call this factor, perhaps "linear futurism."
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Interesting post. Thanks. My experience has been that execs are experts at managing the risk profile of their portfolio and so whether they are leaning out on new innovations or pulling back is a matter of the combination of many factors including the risk profile of the industry, competitive situation, company culture and attitudes toward risk, financial profile, other risks in the portfolio, and certainly their own risk profile and tolerances (including factors related to their career).
On top of all that, I wonder if the issues aren't even more complex. For example, I have found "innovators" can do their job well but are lousy at commercializing (which is where the innovation creates value). And yes, the commercializers are always lamenting the crazy "creatives" in an organization but are stuck on what is, not what could be.
I wonder if truly innovative companies have a third type of person... someone(s) who can bridge from innovation to commercialization and move truly innovative ideas from the concept stage into the market. Sort of a bilingual leader that speaks both camps... design thinker...
Thanks for sparking the thoughts of many.
Great blog. Insightful to recognize that innovation often isn't the desired outcome. As we enter 2011 companies will be undertaking their new planning process, and for most this will involve nothing more than incremental improvements to the existing model - frequently requiring doing more with less resource. As you point out, it doesn't take long before a business withers away, or becomes obsolete by a market shift.
Forbes.com has a good piece on how innovation can be less threatening and part of the planning process by using scenarios http://t.co/7qhGKp3
Jeffrey, thank you.
A superb read, with many insights to resonate with my thinking and experience. This is the first time I've found your blog (via Glenn @skirrid), I will be back. Thanks also for introducing me to Brownian Motion, as well as some of the principles of baseball *~)
As a offshoot contribution, a couple of things I'm currently pondering may also align a little to the equation (if there is one of course?):
1) Should organizational systems and protocols (in business, education, government etc) be focused more on creating good citizens and individuals rather than economic performance? I can't help but believe the former to be more sustainable and innovative in the long-run – just a thought, but I often wonder how many leaders actually take the time away from the balance sheet to ponder it.
2) A quote from Einstein I believe: "Not everything that counts can be counted, and not everything that can be counted counts".
3) 'The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations' is a 2006 book by Ori Brafman. There's many examples within it that question if innovation can be empowered by hierarchy or structure. I often ponder how a change in perspective towards job titles and responsibilities within hierarchy might well effect innovation. Especially in regards to engaging participation and co-creation and meritocratic value – laymen & lunar-man, amateur & pro-amateur, like-minds & like-hearts.
I must also say thanks to your commentators, it's great to read productive yet challenging comments from others (it always a joy to find egoless contribution online) and I'll certainly be looking up the recommended articles – thanks folks.
Thank you all.
Positive thoughts,
Carl
Jeff, your thinking is clearly in tune with the things that forced innovation into the corporate discussion 10 years ago, and why things are moving in a new direction today.
I have been involved in innovation for well over 10 years now, and like you, have been intrigued by the ebb and flow within the senior leadership ranks. Innovation really wasn't embraced by my former firm's senior leadership until it became part of one's compensation plan. Up to that point, innovation was tolerated, even though the CEO spoke openly about the many billion dollars of successes coming to the market.
Once that compensation connection was removed, the focus went to cost reduction and other optimization opportunities, with real innovation dying on the vine. Yet the CEO still professed that investment was being made in innovation. Sadly, the emperor has no clothes!
So what's my view here, and how can I add to your hypothesis? My own learning is that above all, innovation is hard. Yes, it takes creativity. It also takes people with passion and commitment to be wrong more times than they are right. Innovation is hard because using your either/or metaphor, no leaders are willing to sign up for a program that has a 10% success factor. In order to be truly innovative, it's not the money, but the perserverence that makes or breaks you.
Finally, in the black and white world of today's Sig-Sigma guru's, the innovation "greyness" scares the hell out of management. You are spot on that sameness, or delivering that $0.30 dividend every quarter is the motivation, not the potential of a true innovation.
Big innovation comes from leaders who are not afraid to fail, but more importantly, they are not afraid of the success that will come. They ask the right questions, and are willing to stick it out.
Thank you for the thought-provoking post.
I have been researching creativity and innovation in the workplace for several years and I believe one of the major causes for a lack of ideas is due to the organizational culture. This culture comes from the top leadership down so if executives are uncomfortable or unwilling to embrace and support a creative culture, it is their responsbility if no one else wants to put ideas out there.
It doesn't take a lot of money or time to be more innovative and creative in an organization. These are cop-outs, a way of saying "we don't want to give up control" or "we don't like change".
Some of these organizations will disappear and rightly so...
Success at innovation requires both soft (art, qualitative) and hard (facts, quantative) skills - not one or the other. After success in one product market, they start to fill the pipeline with feature requests for existing customers. Or they start measuring innovation based on having 5 to 10 mediocre products rather than 1 or 2 big hits. Impactful innovation requires an ability to weed out bad ideas and make sure the good ones make it through. This can be tough when execs have an emotional attachment to a bad idea or are trying o grab budget, headcount and glory.
I've been thinking a lot about this recently as I talk to leaders of organizations that want innovation as part of their brand, but want nothing to do with innovation as part of their work process.
Your insights are helpful.
In addition, I've found that many leaders confuse best practices with innovation and focus their efforts on finding and implementing best practices. This may or may not help an organization achieve excellence — a best practice in one organization doesn't always transfer to another. Certainly, best practices are not innovation though. Innovation requires a creative overlay to excellence. Yet many of these leaders sell their organizations as innovative by offering what they believe are less risky best practices.
Excellent and very educational article. I wish you had figured this out 10 years ago. I love the sports analogies. Nice device for getting a point across. Bravo!
A few observations:
A, The word "innovation" is often (and is here) misused. How? Read on.
B. The word innovation is defined basically as "positive change on purpose".
C. The ideas & concepts you're discussing fall a bit more under the term "invention".
Doing either or both is more often than not trivialized and devalued with glib cracks like "Anybody can have an idea." Why? Management fear/ego, period.
That being said, as both an Inventor & Innovator (15+ years) I couldn't agree more that "Executives" and "Managers" are scared to death of either. In my experience they often will discharge those of us who have any real innovative abilities the instant we've created the next "big" thing so they can inflate their egos more by taking credit for it. Who is going to know?
They do this (I learned here) either out of cowardice, cognitive dissonance, and/or indolence. This explains their tossing around the word "innovation" like it was free. Now I know that they DID fear me. Good. In the future, I hope they fear me even more.
It didn't used to be this way. But, sometime in the 1980's somebody figured out that you could put the letters CEO after their name and loot companies all day long without fear of prosecution. Hence, we have what we have today. A world run by a lot of megalomaniacs with fragile egos.
I would give almost anything to find a CEO or Upper Management type who actually tells the truth (no matter what) to the people who have to plan their lives around the words of those who are responsible for the standard of living of ALL of their employees. I would hire that person in an instant!
The reality is that most of the ideas for new products for any company come from the Marketing Dept. and go to R&D to see if it can be done at all. Then to the Execs to determine profitably. The "Executives" are involved way too late.
Chainsaw felt obligated to buy a bullet-proof vest, a gun, and paid a bodyguard. Those should have been huge clues that he knew he was playing games at everyone else's expense. If an executive feels he needs these to do his job effectively, he should do anything else for a living.
What they need to do is figure out how to compensate employees with real money when their idea actually makes it to market, and open this to every employee at the company. Giving an employee a $50 gift card to Wal-Mart while the company rakes in Millions is an insult and a half. This is because "innovation" can't be taught, or forced or tracked or quantified. It has to be invited or it will refuse to show up no matter what you do.
Very impressive article. I want/need more of your insights since at our company, as a true dyed in the wool innovator I am not cut-out for being an executive. But have no choice. I need to learn a lot, and you have a lot to teach.
Excellent and very educational article. I wish you had figured this out 10 years ago. I love the sports analogies. Nice device for getting a point across. Bravo!
A few observations:
A, The word "innovation" is often (and is here) misused. How? Read on.
B. The word innovation is defined basically as "positive change on purpose".
C. The ideas & concepts you're discussing fall a bit more under the term "invention".
Doing either or both is more often than not trivialized and devalued with glib cracks like "Anybody can have an idea." Why? Management fear/ego, period.
That being said, as both an Inventor & Innovator (15+ years) I couldn't agree more that "Executives" and "Managers" are scared to death of either. In my experience they often will discharge those of us who have any real innovative abilities the instant we've created the next "big" thing or fixed their glaring mistakes.
They do this (I learned here) either out of cowardice, cognitive dissonance, and/or indolence. This explains their tossing around the word "innovation" like it was free. Now I know that they DID fear me. Good. In the future, I hope they fear me even more now. I used to think it was me.
It didn't used to be this way. But, sometime in the 1980's somebody figured out that you could put the letters CEO after their name and loot companies all day long without fear of prosecution.
I would give almost anything to find a CEO or Upper Management type who actually tells the truth (no matter what) to the people who have to plan their lives around the words of those who are responsible for the standard of living of ALL of their employees. I would hire that person in an instant!
Chainsaw felt obligated to buy a bullet-proof vest, a gun, and paid a bodyguard. Those should have been huge clues that he knew he was playing games at everyone else's expense. If an executive feels he needs these to do his job effectively, he should do anything else for a living.
Very impressive article. I want/need more of your insights since at our company, as a true dyed in the wool innovator I am not cut-out for being an executive. But have no choice. I need to learn a lot, and you have a lot to teach.
What has changed over recent decades to cause the USA to loose the top spot in driving innovation? Randy Voss made a key observation with his point about the compensation plan (as did Matt Snyder with his remark about retail gift cards to reward corporate innovators).
What influences a compensation plan? Leadership. What influences leadership? I say ultimately investors. What do investors of recent decades demand ... more than investors of the mid-1900s? Optimal short term profits (then stampede to the next optimal short term profit opportunity). My assessment is that the aggregate rationale of the investment community - at all levels (from investment houses to individuals) - has evolved away from having a meaningful component of longer haul investing ... thus creating a business climate and leadership culture that focus more than ever on in-year/in-quarter profit optimization decisions.
Most of my career was in big corporate. For most of my 20+ years there, the company tried to evolve from a regulated entity which had a government sanctioned guaranteed rate of return, to being competitive. Reorganize/ downsize was the annual drill with cost-cutting being the flagship. That said, I found a small business unit that had a unique arrangement of being a virtual entrepreneurial shop with a team of a dozen+ having in-(bu)house control of our own network, our own billing system, our own sales force, as well as virtually all other key functions except legal (we did have a dedicated attny in big-corporate).
In this ~$100M "small" business unit, I championed an innovative initiative that fundamentally harnessed existing assets and core competencies of a product in its decline stage, and with a modest add-on investment, enabled the product and business unit to capitalize on the emerging boom of the eCommerce industry. With a 5 year plan that projected a $.75B opportunity, the network-centric leadership was unable to sustain support for a billing-centric solution ... even after a reincarnation effort was made earlier this decade out of a unique incubator-organization that funneled 20 top innovative initiatives into a CEO authorizes shop (since none of the BUs could afford having out-year break-even line items on their balance sheets). While mine was 1 of 2 (of those 20) to make it to market (again) and scale ... the unimaginable happened: the corporate icon company was acquired. Earlier this week eBay announced it realized over $2B in mobile commerce sales - exceeding their forecasts (and reasonably mapping to my 5 year outlook at the beginning of this decade). In hindsight, my corporate leadership was chasing a ghost in the industry (leadership of that ghost is now behind bars) ... but investors too were chasing that ghost, influencing leadership decision making at my former corporate giant.
Companion to the contemporary investors' influence in changing the US business culture is globalization of recent decades. The plateau of the US playing field has been eroding away by a combination of a retreat from tariff protections, to technologies that allow for accessing lower cost human resources in developing nations, to the challenges of competing with firms from nations with an ability to access financial assistance from their sponsor states. Rhetorically, do investors have the patience for US firms to alter their ecosystems to tap the advantages of the new global playing field that is leveling? How do a majority of US business leadership make financial commitments to speculative out-year opportunities in this investor climate?
To me, it fundamentally comes back to the investor-culture which influences how companies and leadership, and ultimately innovators are compensated. It's a human nature-thing.
Another consideration (to my prior post): commercial viability of innovation will typically be key. One of the best examples I have come across recently to illustrate is Corning Inc's "Gorilla Glass" - developed almost 50 years ago ... but only recently getting meaningful marketplace traction with its virtually unbreakable, unscratchable glass that is perfectly suited for mobile devices, flat screen TVs and much more. A remarkable anomaly, Corning was able to survive in recent decades with its core business and now is fortunate to be in the position to capitalize on an innovative development that served no commercially viable purpose until recently
This kind of tripe, which reinforces innovation as some magic process, upsets me. Even though knowing precisely what your next innovation is not possible, it is not even necessary. The innovation PROCESS can be made rigorous and scientific and thus revenues can be smoothed out (which is all executives care about). Read Innovation Tournaments, which takes a managed approach to innovation (as only Wharton professors could).
Also, anyone who confuses Brownian Motion with the Heisenberg Uncertainty principle can not be trusted to school me on what innovation is. And as someone else pointed out, your baseball analogy is wrong, too.
You come off like another nudnik consultant who claims to have some magic panacea that is going to make a company great. Like all crappy consultants, you spew ill-suited simplistic analogies that executives salivate over, but amount to nothing.
I work for a large company that is reinventing itself by using a rigorous approach to innovation. All top executives are on board, because we are able to articulate why the process makes sense. Hope, faith, and trust never enter the conversation. It's all about management and good managers. It's not about simple-minded advice from consultants.
To my readers and commentors. Thanks for your thoughtful comments. I wanted to respond briefly to Anonymous, to first recognize that he or she is correct, I was referring to the Heisenberg principle not Brownian motion. Second, I allow anyone to post any comment that's relevant and drives the discussion forward, so I haven't deleted the previous comment, unlike a lot of comment spam I receive.
I would like to point out a couple of items. First, the mantra of OVO Innovation is completely focused on demystifying innovation and creating a consistent innovation discipline or process. Please don't accuse me of something that I don't advocate.
I'd like to think that we don't "spew" ill-advised or self-promoting innovation hype here on this blog, but look at real issues that we encounter in our clients. And yes, I am an innovation consultant, but that by no means indicates that I offer clients advice or services that I think they don't need or don't have value. I wouldn't come to your playground to accuse you of malpractice and malfeasance without reason, please don't do that here.
I'm glad you've managed to get all your executives on board for innovation, because I can tell you that is a singular accomplishment. In this market, in this environment innovation is a hot-house flower and there are many factors that can cause it to become less important. Regardless of the means your team used to do it, congratulations on a successful innovation effort.
Interesting article.
Let's keep the conversation going. Check out my blog at:
http://wwwthephoenixprinciple.com
Adam Hartung
First thank you for your thoughts, which are well considered but obviously bias toward the notion that innovation is an unqualified good. It isn't because it is too broad a category, and too determined by contingency to try to define.
Innovation is recognized after the fact. For executives who must manage day to day, what occurs at the end of the day is successful or not, needs to be refined or not, replace of not, etc.
The smartest managers that I've worked work are always looking at ways to sharpen their focus, hone their skills, etc. Those who have introduced new products or marketing, strategies have done so out of necessity. Apple is unique in that it is led by a visionary who is continuously in motion. In most businesses, the kind of innovation for which Apple is celebrated is nearly impossible to introduce, if only because the logistical implications.
In marketing we can celebrate say, CP-B for attempting to put their clients brand's into our daily conversation, but whether or not that conversation is short-lived or sustained, can not be predicted, which is why agencies whose work does break out, find that they rarely repeat their successes. In this case, to use your baseball analogy, they excite us not because their they can be relied on to hit a single or double 1 in 3 at bats, but because they hit the ball out of the park 1 in 5 at bats.
Innovation occurs everyday at companies as varied as IBM and Kraft, but often striking change is initially invisible and goes unappreciated for two or three years.
I don't believe "innovation" makes executives uncomfortable, I believe the culture of management in difficult times makes most men and women risk adverse. But paradoxically it also makes them willing to take a chance.
In the final analysis, those of us who ask our clients to be more "innovative" are the ones who fail, if we fail to bring about that innovation. The reason we fail to be persuasive is that, from my experience, most advocates of innovation aren't innovative at all, but are observant and so recognize innovation, which they "borrow" and offer this simulacrum to the client.
But it works as badly as offering someone a beautiful shoe that two small and narrow.
I've gone on too long, so I'll end with this thought, don't look at Apple, or google, or even Ford for ideas. Those ideas are taken and are already aging, and they will be appropriated by their competitors and others. Instead, watch the consumer. Read the news. Be interested in things that normally don't interest you and communities that you normally wouldn't identify with, be engaged with strangers.
In a word, let's not be concerned with the natural conservatism of the "managing" class, but with our knowledge and our ability to persuade, and, in fact, infiltrate.
First thank you for your thoughts, which are well considered but obviously bias toward the notion that innovation is an unqualified good. It isn't because it is too broad a category, and too determined by contingency to try to define.
Innovation is recognized after the fact. For executives who must manage day to day, what occurs at the end of the day is successful or not, needs to be refined or not, replace of not, etc.
The smartest managers that I've worked work are always looking at ways to sharpen their focus, hone their skills, etc. Those who have introduced new products or marketing, strategies have done so out of necessity. Apple is unique in that it is led by a visionary who is continuously in motion. In most businesses, the kind of innovation for which Apple is celebrated is nearly impossible to introduce, if only because the logistical implications.
In marketing we can celebrate say, CP-B for attempting to put their clients brand's into our daily conversation, but whether or not that conversation is short-lived or sustained, can not be predicted, which is why agencies whose work does break out, find that they rarely repeat their successes. In this case, to use your baseball analogy, they excite us not because their they can be relied on to hit a single or double 1 in 3 at bats, but because they hit the ball out of the park 1 in 5 at bats.
Innovation occurs everyday at companies as varied as IBM and Kraft, but often striking change is initially invisible and goes unappreciated for two or three years.
I don't believe "innovation" makes executives uncomfortable, I believe the culture of management in difficult times makes most men and women risk adverse. But paradoxically it also makes them willing to take a chance.
In the final analysis, those of us who ask our clients to be more "innovative" are the ones who fail, if we fail to bring about that innovation. The reason we fail to be persuasive is that, from my experience, most advocates of innovation aren't innovative at all, but are observant and so recognize innovation, which they "borrow" and offer this simulacrum to the client.
But it works as badly as offering someone a beautiful shoe that two small and narrow.
I've gone on too long, so I'll end with this thought, don't look at Apple, or google, or even Ford for ideas. Those ideas are taken and are already aging, and they will be appropriated by their competitors and others. Instead, watch the consumer. Read the news. Be interested in things that normally don't interest you and communities that you normally wouldn't identify with, be engaged with strangers.
In a word, let's not be concerned with the natural conservatism of the "managing" class, but with our knowledge and our ability to persuade, and, in fact, infiltrate.
There will come a time in the life of any organization where innovation will become essential to its very survival in the marketplace.
There was a good article on this in the Harvard Business Review (July-August 2007 by Geoffrey A. Moore) that teaches us how to view these situations. The Article is "Focus on the Middle Term" and is based on previous work of the 1990's "Alchemy of Growth" by Mehrdad Baghai.
In essence products/services are described as belonging to one of three time Horizons. H1 describes the "cash cows" and concerns of the current fiscal year". H2 describes the next generation of high growth opportunities struggling to find their feet in terms of profitability and H3 describes the incubation of the seeds of long term prospects that will serve the company well into the long term future.
A well functioning company system would see smooth transitions from H3 to H2 and finally to H1. The author contends that what in fact happens in most major companies is that they tend to excel in managing H1(bread and butter)and H3(creative playground)but pay insufficient attention to the hard work of transitioning H2 (a sort of strategic no mans land)to H1. The theory is that it is easier for executives to focus on H3(sexy projects with no immediate expectation of return) and H1 (the battleground they know well ie. of squeezing every last drop of profit from their current cash cows) that instead of allocating resources to nurture their H2 projects into fully fledged H1 they will instead prematurely harvest(and often unwittingly destroy)immature H2 projects in favour of meeting the immediate needs of H1 and H3.
Steve
Thanks a lot for this time sharing of innovation about WHY INNOVATION MAKES EXECUTIVES UNCOMFORTABLE. This is really the best website about innovation i have ever read.
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