Peter Drucker had famously said it: “The business of business is to make profits.” Businesses cannot grow and make profits without innovation. For success in a disruptive economy of today, innovation is the most critical factor. Several management gurus have sprung up now to chant the innovation mantra across the world. According to all of them, the ability to constantly create newness in products, services, and business models for competitive advantage is what makes all the difference between stars and laggards.
Intuitively we all know that without innovation, creativity is stifled; ideas – even great ones – fail to be realised; and revenues stagnate or deplete. Although enterprises talk of innovation, hardly a few actually facilitate the climate for innovation within. Even when the innovation roadmap is clear, invariably organisations tend to put up their own dampeners. To overcome such roadblocks that impede innovation, we must differentiate between creativity and innovation, and structure our creative efforts accordingly.
Many executives confuse creativity that typically include generating ideas through brainstorming sessions using tools such as the Six Hats for radically different ideas, with innovation. The creativity in many organisations routinely fails to translate into actionable business goals because processes do not exist to develop those ideas that are relevant to the organisation’s strategic objectives. In her book, The End of Competitive Advantage, my partner and the world’s leading authority on innovation, Rita McGrath, chalks out a path that companies can take to drive growth opportunities, especially when competitive advantage has a short shelf life.
Not having the right people is bad enough but not having the right processes in place is worse. The processes must help nurture ideas that have potential for business growth. When we are headed toward true innovation, we will find ourselves in unchartered waters. Remember what Einstein had said? If at first an idea is not totally absurd, there is no hope for it.
For a brand new idea, you will not know how you are going to solve the problems you are facing. Innovative enterprises enter unexplored territories as opposed to playing it safe. Remember the Blue Ocean strategy? If you immediately know how to implement an idea, you are probably not looking at breakthrough innovation. This is what the P&G chairman talked about when he went on a mission to revamp innovation within the consumer products giant. In his co-authored book, Playing to Win, he wanted more ideas to come from outside the company.
Many organisations end up killing new ideas prematurely. New ideas often enjoy a short honeymoon and become less attractive as problems such as time frame or budget constraints arise. The ideas that might trigger radical innovation die while the familiar ones that don’t represent a real stretch get the budgetary nod.
Often the culprit for this is the traditional financial modeling such as the Net Present Value that is used to approve budgets. We have developed with the experts a set of new tools for solving this roadblock. People who have been part of successful innovation efforts will tell you they experienced two diametrically opposite emotions during the process. The first is uninformed optimism, euphoria for several big ideas that came out of the brainstorming session. Then, when they face reality and seemingly insurmountable roadblocks, they enter the “dark night of the innovator.” This is the point at which many companies pull the plug instead of recognising that they are on the verge of a potential breakthrough.
For innovation to be meaningful, do talk to your customers prior to brainstorming in order to identify their unmet needs. Later, have them help you refine the brainstormed ideas. This way you know you are headed toward an innovation that serves your customers. Innovation depends on a real, sustained, management commitment. I know of a number of CEOs who think they are empowering their people by saying, “We need some new products for next year’s business plan. Make it happen!”
True empowerment is a myth unless management provides structure and commits resources at key points along the way. People need to know how what they are doing relates to an agenda set by executive office, and they need to receive feedback throughout the process. Without a leader championing the teamwork effort, what gets produced bears little resemblance to what actually was desired. When new initiatives where a team has put in much hard work are shot down because they are not what CEO was expecting, or when the management priority changes with changes at the top, the result is wasted resources, missed deadlines, lowered morale and higher attrition.
When a new concept feels right but fails miserably during quantitative testing, you may also want to check the test itself. Only one in tem new products succeeds; yet most product launches are based on considerable quantitative analysis. That makes such analysis a non-science, and it should not be a reason to cast aside good judgment based on years of consumer experience and knowledge of the marketplace.
The writer spearheads execution and innovation for clients@CustomerLab