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!

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