Tuesday, November 30, 2010

What limits innovation in established companies

Sometimes, as an artist or writer you have a great idea and you have the chance to be part of the creation.  Sometimes you'll find that others have beaten you to the idea, and your job is to extend the idea, improve it and make others aware of the original contribution and your offerings.

Some days I'm a creator.  Some days, today for instance, I'm publicizing Gary Hamel's recent post in the Wall Street Journal about Innovation.  Not that Gary needs a significant amount of assistance with publicity, but when someone gets it right, we need to point it out. Not with a flashlight but with a search light so everyone can see.

Gary started his post poking fun of some of the innovation lists - which firms are the "most innovative". As he notes this is like comparing dancers - which is "best" - ballerinas or people who dance the tango?  Square dancers or break dancing?  Are we talking about classical interpretations or best new introduction?  Sometimes I think this is akin to the arguments about how many angels can dance on the head of a pin.  Anyway, the real value of Gary's piece lays hidden over two thirds of the way down, when he starts talking about what limits innovation in established companies.  He says:
  • Few, if any, employees have been trained as business innovators
  • Few employees have access to the sort of customer and industry insights that can help spur innovation
  • Would be innovators face a bureaucratic gauntlet that makes it difficult for them to get the time and resources they need to test their ideas
  • Line managers aren't held accountable for mentoring new business initiatives or lack explicit innovation goals
  • Innovation performance isn't directly tied to top management compensation
  • The metrics for tracking innovation (inputs, throughouts, outputs) are patchy and poorly constructed
  • There's no commonly agreed-upon definition of innovation and no way to compare innovation across teams
These are his words, pulled from his post.  The words I've highlighted with italics and bold and underlining (perhaps overkill) are the key ones.  If I were to take Gary's words and place them in order of sequence and significance, I'd say:

  • Define what innovation means and how it aligns to corporate goals and objectives
  • Establish an innovation strategy - Need Seeker, Market Reader or Technology Driver
  • Establish metrics and measurements for innovation
  • Incorporate innovation goals and measures into annual plans linked to evaluation and compensation
  • Train people throughout the organization on the tools and techniques of innovation
  • Establish a well-defined innovation process that all ideas follow
  • Encourage trend spotting and scenario planning as a way to gain insights
If you look at this list it seems daunting, and unreasonable if you want to create one new product or service.  Yet the additional work to change the culture and make it more innovative, beyond the work necessary to simply grind out one new innovative product, is not that pronounced.  Doing the least expecting the most is rarely a positive strategy.  If you want to be truly innovative, plan to do more to get more.

But you know this already.  The difference between creating innovative products and services and wanting to be more innovative is commitment.
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posted by Jeffrey Phillips at 5:37 AM


Anonymous John Bassler said...

That's all very neat and orderly, but real organizations are never like that. Moreover, Hamel fails to include in his list what is perhaps the largest obstacle to successful innovation (the disruptive kind, at least) in an established organization: powerful incentives to keep doing what is currently making lots of money, as described so clearly by Christensen in "the Innovator's Dilemma." Since Phillips hewed closely to Hamel's list, nothing he suggests addresses the dilemma. As a result, following the suggestions is unlikely to yield success.

2:33 PM  
Anonymous James Rock said...

I think that Gary makes some really good points and I'd like to thank YOU for bringing them to our attention.

In the many companies I have worked in as a Product Engineer, Designer, Manager, Executive and as a Consultant, much of what Gary talks about IS going on. But its in the guise of Product Planning, Product Engineering, Production Engineering and R&D and they generally do have metrics and are rewarded for bringing in new products on time, etc. However, in that context the people working in innovation do not see themselves as innovators... after all its what they do every day... it is the norm, the status quo,

What I mean is that even innovators can fail to be innovative about HOW they innovate. Even in organisations such as car companies, aircraft manufacturers, electronics manufacturers, etc where there is lots of product innovation, it is also important to be innovative about the process of innovation, and for supporting departments to be innovative too. This means considering business model innovation across Finance, HR, IT, Marketing, etc... but it is usually in these areas where metrics and objectives for innovation are lacking.

For me, perhaps the biggest take-way from Gary's article are the key points about about INSIGHT and RESOURCE. As a consultant working in a client staff often ask me "what do you know about OUR industry and how we do things?". I explain to them that I know they are experts in their own field, but what I usually bring is insight from OTHER industries where they have never worked, and which they have never observed. Its interesting to see them learn from examples I provide.. it usually excites them and energises them to become even more creative. It encourages them to do what you mention at the top of your article - applying something that someone else may have invented, but tweaking it to suit their industry and improving it further - continuous innovation in practice. They often laugh when I tell them this is R&D too - Rob & Duplicate!

James Rock
Chief Business Designer
CULTIVAR Consulting - http://www.cultivar.co.uk

11:49 PM  
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