The Innovation Imperative: Four Things to Foster Innovation in Organizations

This post is an adaptation of remarks given at the International Pet Food Forum at an event hosted by Diana Pet Food

The forces of change surround us and are unrelenting. Back in 1965, Moore predicted that computing power would exponentially increase. Almost 60 years later that still holds true. Fiber optics allow us to move data at amazing speeds and the cost of storage has plummeted from a cool $300K for 1 gig in 1980, to virtually free today. In addition to the accelerating power of the internet, we see an explosion in the speed of change. It may be driven by technology but it touches all that we do.

So we find ourselves in an environment in which disruption is the steady state. All you must do is flip through your smart phone to see the casualties. Go to a movie theater? No just stream it. Buy a video camera? No thanks – I have my phone. Buy a flashlight for an emergency? Nope, just have your phone handy. If you were a flashlight manufacturer not that long ago, would you have guessed that AT&T and Apple were going to be competitive threats?

This it is NOT business as usual.

Examples abound. We know that 88% of the companies on the Fortune 500 list in 1955 no longer exist today: Blockbuster, Kodak, Borders, Sears (Sear’s Tower – the original mail order biz), Blackberry and more. 50 years ago, if you made it onto the Fortune 500 list, you were likely to stay there for 75 years. Now the average duration is 15 years and declining. And the big players today – Google, Uber and Facebook are barely teenagers in a human lifespan, yet they dominate.

The differentiator – an imperative to INNOVATE.

A quick look at Fast Companies Most Innovative Companies of 201list tells the tale.  The most innovative companies are also disproportionately the most profitable, the fastest growing, and the most likely to bump out a longstanding company from the Fortune 500 list. Leading the pack: Apple, followed by Netflix, Square, Amazon, Patagonia, CVS and Spotify. Certainly an interesting mix – with one common denominator: innovation as a core competency.

Today the race is being won by those who can rethink the market, ride these forces of exponential change – and create something nimble, agile, and adaptable. And in today’s world – that equates to sustainability. Blockbuster went bust – but Netflix is killing it. Borders is boarded up- but Amazon, which started as a book seller, now allows anyone to set up a storefront and sell virtually anything. Amazon Web Services, which grew out of the company’s own e-commerce infrastructure needs, has become a $13 billion business.

In the Industrial Era, organizations of the late 1800’s  through the 20th century, bigger was better. Stability was key. Companies competed by sheer size – the goal was to crush their competition. Bureaucracy flourished. Org charts calcified the organization into neat little boxes and standardization, consistency and minimizing disruption were the primary focus.

And now, here we are. In an entirely new world. We are in an age where our industrial era organizations simply don’t work. Where we need new models, new skills and new ways of working. Where small and nimble is a competitive advantage. Where tried and true products are passé. Where speed matters. Where it’s imperative to innovate.

Now, innovation is a HUGE topic – and a deep one. So for this post I’d like to share with you four ways organizations are fostering innovation.

Top performing organizations in the 21st century:

  • Treat innovation as a business process
  • Foster the skill of creativity
  • Connect with their customers
  •  Collaborate

Each of these are big topics, so for the sake of brevity I’ll provide a brief description and some questions to consider for each.

Innovation as a Business Process.

There is a process to innovation, in spite of the belief by some that innovating is a “loosey goosey” thing somebody does in R&D. Just ask IDEO. Smart companies know the process and incorporate it into all the other processes we know so well: Finance, Accounting, HR, Sales…  Innovation is not isolated nor the sole function of the forgotten folks in R&D. It is embedded in the organization, provided resources and a path from innovation to production.

We can no longer afford to sort the world into the “business types” (think rational, linear, predictable) and the “creatives” (think intuitive, edgy, and free flowing). Innovative companies don’t exhort their employees to innovate; they have structures in place, resources identified, and processes to follow. Just as accounting, HR, engineering and operations are defined – so can innovation.

You might ask:

  • Where does innovation happen in your company (if at all)?
  • Are there dedicated resources for innovation?
  • Who is your company is charged to innovate?
  • What was the last innovation your company implemented?
  • What is in your innovation pipeline?

CREATIVITY AS A SKILL

It took me 5 long years to get my MBA at the Krannert School of Management. I spent 14 years in a Fortune 200 company. And at no time in no way did the notion of creating something important in business get much attention. It was not taught, even though it is a process that can be taught. It was not encouraged, measured, or rewarded.

I think that we’d all agree that the many business geniuses are terribly creative – from Henry Ford to Steve Jobs to Elon Musk to Jeff Bezos. Our problem is not embracing creativity at the top. The problem is that we’ve driven creativity out of the middle ranks by such a strong focus on left-brained business management. Management by the numbers and a sole focus on short-term financials. We’re out of balance. We need to find ways to balance the creative with the effective management – and do it quickly.

We need to think of creativity as a business skill needed throughout the organization. Skills that are used every day by everyone, not just at the top. Not just when we are in crisis. Not just the folks in the R&D department. We need to learn the process of creating and create organizational structures that foster creativity. Period.

You might ask:

  • Who is charged to be creative in your organization?
  • Are the skills of creativity seen as a core competency? Taught? Supported?
  • What happens when creative ideas emerge?
  • Are there process in place to:
    • Generate many ideas, rather than a few
    • Test those ideas in the market
    • Vet those ideas thoroughly
    • Move the best ideas into your day-to-day operations
  • Diversity fuels creativity. How are diverse people, ideas, cultures and perspectives encouraged?
  • Creativity requires space, time, and freedom to dream. Is your organization so focused on productivity that there is no time to create?

CONNECT

It seems that the more high tech we become, the more high touch we crave. One size does not fit all any longer. Consumers want personalized. They want to be understood. To be connected with on an emotional level.

In all areas of business today – connecting with those that we provide goods and services to is critical. The creativity needed in today’s business world is not random, not just “edgy” for the sake of “edginess” – but creative innovations that speak to a need. It is not creativity for the sake of creating alone – but creating based on connection with your current customers, your future customers, and perhaps customers you can’t even imagine right now.

Great questions to ask about your ability to connect include:

  • How often do you interact with the people that use your goods and services?
  • Is that time spent merely trying to sell them (or service) what you already have or is it talking and listening and observing what they need?
  • How much do you use human centered design in your organization?
  • To what extent do you focus on your WHY rather than your features and benefits?
  • People connect emotionally. To what extent do you communicate and connect emotionally as well as rationally?
  • How “whole brained” are you? Do you rely on sheer left-brain (logical/rational/linear) or also use right-brained thinking (intuitive/non-linear/emergent).

COLLABORATE

If you recall, I mentioned that competition was the order of the day in industrial era organizations. As I worked for 13 + years in a Fortune 200 company – collaboration was at best frowned upon, and most often discouraged. It was discouraged both inside and outside the organization for fear of giving up information or ideas, or perhaps enabling someone else to take advantage of us or do better than us. Go to a conference? No way – we have training inside! Invite other departments to help solve a problem? No way – it will signal that we don’t have all the answers. Collaborate with a sister division with a new customer? Unheard of – what if their numbers are better than ours.

Now in hindsight, it seems a bit ridiculous. But it was real. And it IS real. In so many of the organizations I work with, people are tightly bound into their functional “silos”. Unable to see across the company as a bigger picture. Each functional area only out for the benefit of their own. Truly the parts more important than the whole.

21st century organizations know that even if they could be self-sustaining, that doing so would take way too long and would take too many resources. They know that knowledge is growing so quickly that they can’t be an expert in it all – so they find ways to collaborate with the expertise they need.

Emerging Networks

Networks are emerging much like the way we organize ourselves – a bit messier, a lot less linear, and a whole lot more powerful. A great case study is Airbnb, who has taken collaboration to an entirely new level. Tech innovation and the power of networks has propelled Airbnb to surpass the valuation of Hilton and Hyatt COMBINED. That valuation in spite of the fact that Airbnb owns no property or real estate. Airbnb’s valuation is based on its ability to innovate, its network, and its ability to connect with people who either have space to rent or need to rent space.

Questions about Collaboration

Collaboration fuels new ideas and it requires diversity. Collaboration can share the costs and rewards of bringing new products and services to market, yet requires discarding our ego’s desire to know it all and control it all. Collaboration can provide us quick access to resources and as such, shortens the time to do something innovative. But it also requires us to leave behind some of our old thinking about competition, control and certainty.

Some questions to ponder about collaboration:

  • Are employees in your organization encouraged to interact and collaborate across functions?
  • To what extent are employees encouraged to get outside the walls of the business and forge relationships with those outside?
  • Are there strategic partners you collaborate with?
  • How much internal competition exists? Within departments? Across departments and functional units?
  • How is collaboration nurtured? Supported? Encouraged?

Responding to today’s environment requires us to think about business in a different light. Where innovation exists alongside optimization. Where business skills and thinking are a blend of left and right brained activity. Where we get comfortable with the joy of creating, the emotion of connecting, and the powerful output of networks and collaborations.

These forces of change are not abating any time soon, so we are faced with the imperative choice to innovate or to stagnate. To change or die.

I know what side I’m on!

Why Embracing Failure is the Wrong Message

Face it: Failure stinks. No one I know likes it. And even the most successful and creative people I know, don’t celebrate things that turned out poorly.

Yet a mantra that has emerged in the last five years is to “celebrate” failure. Really? Celebrate?

While I get, on some level, the reasoning to encourage people to take a risk and actually “do something” or to even possibly do “something big” – the notion of celebrating failure is not, what I believe, is in anyone’s best interest.

Working in and with organizations, I fully recognize the great extents to which people will take to avoid looking “less than” or “foolish” or “incapable”. I also fully recognize the games that are played (some with intention and some unconsciously) to garner the coveted raise or promotion and at times, survive the latest reorganization.

Anything “less than” often is hidden, buried, ignored or rationalized away. I’ve seen multi-million projects that were abject failures be allowed to linger on, all to avoid embarrassment. I’ve seen amazing amounts of money, time and effort be put into a failing project in an attempt to prop it enough to get it over the finish line, only to declare “done” and then allow it to wither away.

And so celebrating failure can then become one more excuse. One more “I only did what you were encouraging me to do” lament as performance is reviewed.

I totally understand that vibrant organizations need innovation and creativity more than ever, and that innovation and new ideas are inherent with risk. Some will make it. Most will not.

Removing Detrimental Organizational Behaviors

Given that, there are certain behaviors that are detrimental to organizational sustainability today. These include:

  • The inability to see or seek new opportunities
  • Playing it safe individual behaviors that undermine the whole
  • Only taking on small, safe, or incremental projects
  • Failing to learn quickly with feedback from initial attempts
  • Avoiding solid analysis of the results of a “less than” effort due to embarrassment

Adding Healthy Organizational Behaviors

Rather than celebrating failure, I suspect what is truly needed is a host of healthy behaviors that include:

  • Contributing new ideas, which are by design, unpolished, unproven and risky
  • The willingness to step outside comfort zones and try new things
  • The deep understanding that innovation is experimental – and that each small failure brings you closer to a success
  • Persistence in the face of obstacles
  • Transparency about what worked and what didn’t
  • Meaningful and deep learning from current misses that enables faster and better attempts in the future
  • Comfort with ambiguity and uncertainty

And so, let’s celebrate creativity and contributing new ideas. Let’s celebrate experimentation, observation and rapid learning. Let’s celebrate bold steps forward into the ambiguous unknown future. Let’s celebrate persistence and pivots and progress.

And when we fail, we celebrate picking ourselves up, reflecting on what happened, and starting anew – smarter, more resilient and more likely to succeed this time around.

Five Mistaken Assumptions Business People Have about Creativity and Innovation

Continuing on with my exploration of creativity and innovation in the “workplace”, let me share some common myths I encounter as I talk about creativity in the business world and the role of leaders as creators. The notion clearly is dissonant to many who hold the prevailing belief that work is work and creativity is play or at best only for the arts. As I peel back what underlies this notion that creativity and business are integrated rather than disparate.

Here are some of the common beliefs that block creativity from business that are well worth a critical examination.

  1. Creative types are different than business types.

Stereotypes abound. On all fronts.

We stereotype innovators with beliefs like: Creators are free spirits and undisciplined. They only work when they feel like it. They are only in the arts, like musicians, artists and authors.

We also have stereotypes about business types: They are Type A. They are only analytical and never intuitive. They are focused solely on productivity and work hard. Creativity is not important for them.

Here is the reality.

  • Innovators have an amazing amount of discipline and focus.
  • Some of the best business people are extraordinary innovators (think Jobs, Disney, Bezos, Musk)
  • Innovators balance creativity and focused execution. So do the best business people I know.
  1. Innovation requires a really big idea that dramatically changes everything.

We tend to be captivated by the exceptional. And yes, every once in a while there is someone with a really big and new idea. And much more often, there are many who innovate incrementally. Making something just a bit better. Who find a way to provide better customer service, enhance an existing product or service, find a way to add value in new ways or to streamline an internal process.

Incremental innovation lowers the bar in which it makes creativity accessible to us mere mortals. It mimics evolution – small changes over time. Incremental innovation has taken us from land lines to smart phones. It has taken us from bicycles to Teslas. It requires only that we find one way to improve or a way in which we can combine two disparate ideas into a new one. I can do that, you can do that. In fact, we do that all the time in business and call it continuous improvement.

  1. Creative people bat 1000.

My father had an apt observation. He would often say that the difference between an amateur photographer and a professional is that the amateur takes one picture and expects it to be excellent while the professional takes 100 and hopes there is one good one. Innovators and creators know that it takes two things: practice and production. No one gets good at anything without years of practice and along that path there are plenty of failed or less than stellar attempts. And even when proficient; innovators know that most of their ideas will come to nothing. But they know that it is from the process of producing many that the valuable one emerges.

The lesson for business is to find space for experimentation. Where the best output of an effort is getting smarter. Where progress, not perfection is the aim.

  1. You can create at will.

You can’t. Inspiration comes and inspiration goes. However, that does not mean that you don’t keep at the task at hand. I’ve studied the habits of the innovators I admire and they share a commonality – a strong work ethic. No matter if they are feeling particularly inspired or not, they show up and do the work. Hour after hour. Day after day. Some days are magic. Others are not. None the less, they continue on.

That being said, there are some things we know about fostering creativity and innovation. Our brains and bodies are most creative when we are well rested. Innovative ideas tend to surface when are minds are relaxed. Putting ourselves in certain environments often spark new connections and ideas. These include:

  • Places of reflection (think nature)
  • Places of beauty (think art museums or beautiful gardens)
  • Places that are unfamiliar (think travel)
  • Places of play (think time with a 5 year old)
  1. Getting the idea is the hard part; after that it’s easy.

Ideation is only the first step of the creative process. And for some it is very hard. And for others it is very easy. Either way, it is only the first step. A critical one, no doubt, as there are great ideas and there are not so great ideas. Some are lower risk; other higher. Some have marketability; others don’t. Some come at just the right time; others miss altogether.

Innovation is actually a multiple step process. Six by my count:

  1. Ideation
  2. Exploration & Testing
  3. Prototyping
  4. Executing
  5. Refining
  6. Completion

Each step along the way has its joys and its challenges.

  • It’s great fun to share your idea and it stinks to have it shot down by others
  • Putting together an implementation plan feels good, but it is easy to be overwhelmed at all it will take to make the idea a reality
  • Executing and doing the work moves your idea forward, but is just old plain hard work. And work that, in this moment, is fraught with uncertainty.
  • And after all that hard work, your innovation hits the intended audience. And guaranteed that changes will be in order. Back to the drawing board!
  • As surprising as it may seem, completion may indeed be the hardest step. For you must let go of improving, of adding, of tweaking. You must overcome your vulnerability to share your creation with the world. You must implement the process, ship the product or offer the new service – all without totally knowing if you have a hit or a miss.

I hope that I’ve not deterred you from the path of integrating more creativity and innovation in business. For without it, your organization’s sustainability is at risk. It is not an easy path, but one that can yield great results for the effort.

Why Innovation Matters to Organizations

I often quip that back in 2006 the makers of flashlights were highly unlikely to be discussing their response to the competitive threat that the phone company was to their business. Who would have thought that in a few years just about everyone would have a flashlight with them almost every moment of every day?

Funny, but true. A quick scroll through your phone and the list of casualties wrought by smart phones is amazing. In a few short years, smart phones and apps have been a major disruption (if not a death knell) to photography (still and video), books, games, movies, big box stores, restaurants, newspapers, computers, and music. Smart phones have changed how we sell, how we buy, how we connect, how we collaborate and how we do business.

And the smart phone is only one of the disruptive forces businesses face today. Add to the list the increase in computing power, the dramatic drop on the cost of storage, the advent of big data, increasingly faster data transmission speeds, the internet of things and the connection of people across the globe via the World Wide Web.

Clearly it is not business as usual. Nor will things be more stable, more predictable or easier to anticipate, respond to, or manage any time soon.

Innovation in Organizations

In the not so distant past, organizations had the luxury of having most of their workforce focused on the core business and a few odd balls tinkering around in R&D. The CEO and perhaps a few in C suite would the external scanners, discerning both threats and opportunities.

 

I suspect that those of us who have worked in a large, stable, successful company have hit the wall when suggesting an innovation, for there are many internal processes designed to protect the status quo and to successfully fend off new ideas or ways of doing things.

Today’s environment requires more. More outside intelligence. More ideas. More innovation. More speed. More willingness to try new approaches.

A quick look at Fast Companies Most Innovative Companies of 2017 list tells the tale.  The most innovative companies are also disproportionately the most profitable, the fastest growing and the most likely to bump out a longstanding company from the Fortune 500 list. Only 12% of the companies that were in the top 500 in 1955 still remained on the list in 2016. And these were the behemoths – to “too big to fail” kind of companies.

Tech innovation and the power of networks has propelled Airbnb to surpass the valuation of Hilton and Hyatt COMBINED. That valuation in spite of the fact that Airbnb owns no property or real estate. What they do have is a network, technology and the ability to innovate in a space that has been dominated with a very different business model.

In an age where your longstanding business can be disrupted by a novel way to approach the market with a new business model and tech start up – innovation must be cultivated and embraced on the inside. Having more people who can rethink the business, the market, your produces and services, your delivery channels, and your internal processes is a competitive advantage. In fact, it may be a survival strategy.

As such, I’m going to do a series of posts on the creative process INSIDE organizations. Stay tuned!

I’m hoping you’ll share your thoughts and insights as I do. For one of the hallmarks of innovation is the importance of many voices and multiple viewpoints!

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