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Much that is held as common wisdom regarding how successful innovation is managed
is wrong. This is not to say that organizations are not innovative; obviously
many are. But how and why these companies are innovative (and what to learn
from their innovation) is very different than what many managers think.
The authors of Making Innovation Work set the record straight. Innovation does not require a revolution. What it does require is thoughtful construction of solid management processes and an organization that can get things done.
Innovation is not alchemy, with mystifying transformations. It's much more like the basic blocking and tackling of other key business functions.
Innovation is not primarily about creativity and having a "creative" culture. Many companies find that coming up with good-to-great ideas is the easy part; the hard stuff is selecting the right ideas and implementing them.
Nor is it solely about processes and tools. These do count, but tools and processes alone are not effective. They must be
coupled with an organization, metrics, and incentives that can make things happen.
Innovation does not focus exclusively on cool new technology. Developing new business models is every bit as important... sometimes more (think
Dell and Southwest Airlines).
Innovation is not something that every company needs in large quantities. Innovation must match the opportunity and the competencies of the organization.
Sometimes, with good timing, a little goes a long way and trying to force innovation
can
have disastrous consequences.
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According to the authors
1. Exert strong leadership on the portfolio decisions and encourage truly significant
value creation.
2. Integrate innovation into the company's basic business mentality.
3. Align the amount and type of innovation to the company's business; select a "Play to Win" or a "Play not to Lose" innovation strategy.
4. Manage the natural tension between creativity and value capture so that the company generates successful new ideas and gains the maximum return on its investment.
5. Neutralize organizational antibodies that kill off good ideas because they are different from the norm.
6. Recognize that the fundamental building blocks of innovation are networks that include people and knowledge, both inside and outside the organization.
7. Create the right metrics and incentives for innovation.
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The Leadership Role
"Jeff Immelt urges investors and engineers to be patient with innovation. He has poured extra money into R&D at GE, while loosening the timelines on projects that may not pay off for ten years or more. He says that, for established companies, investing in emerging technologies is a matter of survival. 'I just see very clearly that unless you're out there pushing the envelope and driving innovation, you're not going to get the kind of margins and the kind of growth that we need for a company like GE. I really see it as an economic imperative.'"
Combining Creativity with Commercial Savvy
Under CEO A.G. Lafley, Procter & Gamble "...continues to shift its center of gravity toward higher-growth, higher-margin
businesses such as healthcare and pesonal care. It increased its emphasis on
innovation, increased the speed of getting new products to market, and reduced
its over-reliance on incremental innovations... and he has led people in the
company to recognize that innovation and profitability can coexist."
Cultivating Innovation
"Innovation also requires periods of stability and periods of change. Constant revolution is an unproductive state because the company is unable to fully capture the value of its innovation effort. Toyota's introduction of the hybrid automobile Prius changed the direction of the industry. Subsequently, Toyota followed with a series of incremental innovations and withheld additional disruptive innovations. A period of incremental innovations (the constant refinement of an idea) should follow each radical innovation in order to maximize the value extracted from the radical innovation."
Balancing Creativity and Value Creation
"Sometimes innovation comes from funny places. For insight into how to balance creativity with the practicalities of commercialization, we turn to a somewhat surprising source: the Marx Brothers, one of the world's most famous comedy teams. Each one of the Marx Brothers' acts was developed in small pieces in the creative marketplace...'I was just kidding around one day and started to walk funny," Groucho Marx once wrote. 'The audience liked it so I kept it in. I would try a line and leave it in too if it got a laugh. If it didn't, I'd take it out and put in another. Pretty soon I had a character.' ...Through the course of his career, he practiced this creative/commercial balance." |
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