We Can Do Better Than That: Thoughts On Innovation

This won’t do.

We hesitate to even utter the word anymore, it is so over-used and abused, but innovation remains part of most company ’s “strategy” and in the motivational speeches of CEO’s everywhere. This, despite the fact that few can really define not only what innovation means, but what it means for their business or their business model. We push through this fog, though, hoping that the presence of innovation in executive job descriptions and on the whiteboards of meeting rooms is enough to get us where we need to go. In many ways, innovation comes and goes in cycles within a company… typically driven by financial and economic realities and the “need to be innovative” to counter poor financial performance or operating inefficiencies. This is reaction, not strategy.

So, innovation talk is seemingly everywhere again… but things are a bit different now. Yes, you will find features in most monthly business periodicals just like five years ago. Yes, the business section at the bookstore is full of “new” perspectives on innovation in business. But as you survey the content, you find that the vernacular has changed a little and there is much more discussion around the practical matters around innovation management. As companies discuss the need to innovate, they find that the managing of innovation is the biggest challenge, the biggest obstacle to actually accomplishing anything.

The reality is that companies need to come up with new ideas and rethink their models, but to do this effectively and meaningfully they also need to develop and support a culture that consistently encourages and rewards innovation. A culture that is defined by the value of bringing new ideas, and executing on those determined to be of the most value. I wrote a post on strategic risk management and the importance of business model innovation in moving companies from stasis to growth. A survey of the last ten years yields abundant contrasts between the companies that managed to pull this off, changing their culture and reinventing their business, and those that did not. The failures are in the news every day, whether they be in consumer electronics or industrial machinery, packaged food products or franchise restaurants. Typically, the companies whose challenges are highlighted in the news are the same companies that, years ago, were dominating their category. The difference, instead of using that momentum and competitive advantage to further develop markets and foster innovation, they focused on exploiting their success, arrogantly thinking that would sustain success in perpetuity. It obviously did not.

The companies that got it, though, are the ones that started with their culture and made endemic the drive to innovate. We also see these companies highlighted every day in the news. Some companies have so deeply ingrained a culture of innovation, and have so effectively managed that innovation, that their business model defies definition in the traditional sense. Look at Toyota. Look at Samsung. In categories rife with competition and low margins, they are successful. How is this possible? Effective innovation management, clear vision, and a determination to execute successfully.

Knowing that your company faces a diversity of risks and challenges to a successful future, and knowing that effectively navigating this situation depends on bringing forth new ideas and setting in motion a cycle of reinvention, it is confusing to know where to even begin. Do you hire innovative people? Do you acquire an innovative company? Do you create an innovation task team? Those may be options, and shorter term in their value, but what about ten years from now? You need to begin with the management culture.

There is a terrific by that is excerpted from his new book He posits that legacy management thinking, a focus on efficiency over excellence, has thoroughly undermined the development of innovation cultures in business and that to ultimately be successful, the change needs to start at the top:

“The sooner your company starts sloughing off its legacy management beliefs, the sooner it’s going to become truly fit for the future. As we’ve seen, a few companies are already traveling light, having left a lot of their outdated management baggage back there in the 20th century. In the end, there’s really not much of a choice: You can either wait for tomorrow’s management heretics to beat the orthodoxies out of your company, or you can start coaxing them out right now.”

Gary Hamel

One Response to “We Can Do Better Than That: Thoughts On Innovation”

  1. Toyota: Culture of Curiousity, Curious Culture… - schneiderism Says:

    [...] executive management. This is consistent with the reality that effective and innovative cultures begin at the top. Beyond all of this, though, McFarland identifies another quality of Toyota’s culture that [...]

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