Facts about Innovation

A recent IBM advertisement features a superhero wannabe. This pudgy guy has an ‘I’ emblazoned across his chest. Innovation man, as he is called, is stopped by a curious onlooker who wants to know what the I stands for: The I he explains, is for innovation, ideation, invigoration, incubation. The onlooker asks him I for implementation? I says, I knew I forgot something. The ad is a wry comment on the state of innovation in most companies. Most companies put implementation as an add-on after ideation.

Creativity is glamorous. But getting a new idea is just 1% of the job, the rest is execution. Companies don’t pay much attention to execution because they think that innovation equals creativity. There is another problem related to execution. What they know how to execute is business as usual or the core business. Organizations don’t lack great ideas but they struggle in innovation because of over focus. That’s why Wal-Mart out-maneuvered Sears in the discount retailing format.

It’s a commonly held notion that we need a hero who champions the idea and works against all odds. Innovation doesn’t require great leaders; it obviously requires an above average leader. As for the notion that s/he fights bureaucracy it breeds a very wrong view because to succeed, you don’t have to fight bureaucracy, you have to learn to co-exist with it, to tap into the resources base.

Skunkworks is a notion that the innovation team works in the basement. It follows none of the rules of the corporate office. But innovation in big corporations is centered around ways they can leverage their enormous capabilities to work on complex problems which a start up would never do. While innovation projects do need some space of their own, they also need to be connected to the main organization so as forces a degree of accountability on them.

Major organizational changes are not needed. Lou Gerstner as soon as he came has changed everything IBM under him. He became a metaphor for how to catalyze innovation. But that doesn’t mean innovation requires major changes. Innovation requires major targeted changes. Changes have to be made in that part of the organization where that innovation is being cultivated. By whole sale change you can destroy the business-as-usual machinery. Because business-as-usual is what keeps an organization going but innovation is what keeps its future profits secure.

To say innovation equals chaos is dangerous because that’s only about the 1%. The 99% of the commercialization parts requires extreme discipline.

The job of the people at the top is to come up with the strategy while people at the bottom execute it. People in the middle make sure things happen. But the problem with this approach is that innovation becomes nothing more than responding to changes. The people closest to the action are the so-called doers. So, Ford, for instance, has missed a huge opportunity because it didn’t empower the people in India to drive the innovation for the people’s car. Their approach is that people in Detroit know what work best. The CEO’s job is not to get actively involved in innovation but to manage the organizational context.

In the 1970s Xerox was making a lot of money with their $2,000 copiers when a bunch of engineers (“the doers”) thought of $1,000 personal copiers. Xerox asked its customers if it wanted these. The problem with that is: who is the customer of Xerox at that point? It is a big company’s central copying department. So the answer is obviously no. That’s the problem of the big three automobile companies in India. The customer who is driving a BMW will never tell you he wants a one lakh car.

But isn’t a part of innovation about listening to the customers? It’s about being closer to which customer Companies need to be wary about only reacting to feedback of current customers. Non-users what we call future customers would be a very important set because they know what shifts are taking place.

There is an element of truth to say Planning is irrelevant to this because if you are in a rapidly hanging industry, when do you plan? But planning the future is going to be full of surprises. The worst thing you can do in an organization is to be surprised by a surprise. You need to create capacity to respond to surprises. Build mechanisms that even if the future doesn’t happen like planned earlier it has some capacity to respond to it. It is a learning tool.

It requires new products and technologies:

Many of the innovations have nothing to do with new products. The Mumbai dabbawallahs (lunch couriers), for instance distributed the Reliance Energy IPO marketing material with the dabbas to 200,000 households and delivered the filled up forms to the Reliance office. Even Apple’s iPod one of the most popular innovations in recent times is nothing but a hand held hard drive.

There are generalization tools that companies can use to drive innovation

Innovation comes in different forms and requires a nuanced approach. If you apply general principles, you can actually destroy it. So the tools to measure various indicators such as performance of, say GE‘s Six Sigma which is a continuous performance improvement process vis-à-vis a Tata Nano will vary.