Real innovation is slowly grinding to a halt in many organizations. If the top leadership are not totally engaged in driving innovation it struggles, it grows in complexity; it gets bogged down in the internal politics of self-preservation and delivers only a ‘watered down’ end result, seen far too often to be a lasting sustaining solution, which it is plainly not. When are we going to recognize that innovation, as we have it organized within many organizations today, is failing to deliver on its promise of providing the growth expected and so often talked about by the CEO?
Larger organizations, let’s face it, are so caught up in the incremental trap. Risk mitigation rules at every level of the management of innovation, as it ‘churns’ slowly through the complex innovation process, built up over the years. If an organization is totally happy with spending all its knowledge and internal resource on providing incremental products to its customers and gets away with it, then fair enough but does it have to be so?
Alternatively, if shareholders, customers and competitor’s sense there should be far more, then the organization is travelling a road that indicates the pathway to decline. The worry becomes simply, can it reverse this mind-set of incrementalism and risk mitigation in driving its innovation? There is a different pathway on offer but to travel down it, you have to think about some serious form of radically altering your existing innovation structure and processes.
Much has happened in innovation in the past ten years.
Often you wonder if any new understanding really has permeated through the outer skin of some organizations, perhaps with the notable exception of open innovation. We have greater technology, software, and understanding of systems, people, and structures than ten years ago. We are better at measuring innovation in inputs, throughputs, outputs and outcomes or have the potential to do this. Of course, that is, if we chose too.
The real issue for me is that much of this potential, these potential advancements are often seemingly being ignored, or certainly not fully leveraged. We just keep adding more and more on top of the existing systems, instead of stepping back and looking for a more radical redesign, one that can change the innovation dynamics. The one that transforms and goes well beyond our existing slow growth reality, seen today based on present performance of so many. The extra margins of profit today are more likely to come from reducing not enhancing.
So why do I argue we need some radical re-thinking of how we manage innovation?
Well most of the economies are flat on their back; the money in the pocket of the consumer is dwindling and less certain than in recent years. Many of our larger organizations continue on in their juggernaut fashion, believing they are that irresistible force that is indestructible and that they can keep on going offering increasing extensions to existing products, passing on higher prices expecting those higher sales. Will this last? I doubt it.
They are busy chasing higher revenue, not so much in existing markets but more by expansion into new markets. Much of the existing market activity is quickly negated by competitors, which stalk every move and cover off any short-term advantage to try to regain the status quo. Layoffs, reductions across the board just continue to eat into the very fabric of the organization to extract profit, often at the price of real innovative growth.
Organizations are increasing their complexity by the very nature of the business model they are pursuing. They are reducing decision-making away from the markets and the field and centralizing this, therefore requiring the building up of the necessary controls to make sure there is compliance and fulfilment of these decisions. They are increasingly remote and losing the very trust of many of their employees by this ‘drip by drip’ set of actions.
Complexity comes with a growing cost.
It is slowing everything down. More people are spending all of their working days coordinating and justifying more than ever. The productive person, seen before to be the one producing something new or different is today plainly different. They are more likely seen as dynamic by the way they respond to requests, the way they communicate and coordinate, the way they chase and monitor. They shut down more in creativity by their need to satisfy growing demands placed on them. Organizations are employing hundreds, if not thousands caught up in feeding the machine not driving the value-adding process. We spend increasing more time in seeking out efficiency and being more effective but effective at what? Certainly not on working with great innovation in the majority of cases!
The need to shift from efficiency to agility for innovation
Our focus is on efficiency and control, delivering more and more incremental better products, trying to stay one step ahead of competitors. By being in increasing control by planning and knowing your outcomes well ahead of the real need you are running your process to minimise risk and variation. The need is to have constant visibility and anticipating obstacles by employing the means to make this happen, being in total control, taking out uncertainty, taking out experimentation and replacing it with certainty. Six sigma enthusiasts must be delighted.
What if we changed this?
We want to bring in agility, the ability to adapt quickly to changing market conditions, to lead market change that increasingly shows signs of volatility and uncertainty. Would our existing ruthless grinding execution machines be up to the different challenge? Challenges like building in accelerating effective exception handling, separating the prevailing present business and application logic to be driven by different innovation logic of rapid, more radical, responsive product and service offerings that provide solutions that get closer to meeting some often radically changing customer needs. We need to be looking to take greater variation and turn it into a market winning advantage.
To achieve greater agility we need to cut rework, we need to seek faster problem resolution and reduce cycle times way down, reduce downtime involved in waiting for escalating decision-making of the past, minimise any backlogs and combine current innovation into bigger big bang solutions that can cut through market uncertainties to maintain your share of wallet, mouth or band width. We need the principles of Six Sigma but with distinct differences.
A corporate culture dominated by Six Sigma management theory will be primarily incline toward inwardly focused, continuous improvement types of innovation activity — process, customer service, systems, operations, and so on. The aim is small, incremental innovations that really can add up but only can go so far!
Seeking a more entrepreneurial environment
A culture that fosters disruptive or encourages distinctive innovation is going to be more entrepreneurial, more outwardly focused on new markets, technologies, and business models. The goal is to find big new growth platforms that add significant chunks of revenue and profit.
Innovation is uncertain, unsure territory and requires sometimes a significant level of unstructured thinking to spot the emerging patterns and opportunities; the innovation system needs to build this in as slack. We need to ask the underlying question is whether the discipline of process management will fertilize or strangle those new ideas that come from light-bulb moments of brilliance”
The need is for a different orientation
We cannot make money without innovating for growth, and we cannot save money by not having efficient processes. What we need is to strike a new balance from what we know that works and what we know is questionable if the activity does not have a real value add component to it.
The task would be to re-invent how we work to carry out this. We need to focus on the fundamentals within our existing processes and even be ready to tear down many of the current ways of managing innovation within the business. We need to seek solutions from a fresh perspective. When you begin to question you begin to re-engineer.
Part two, published tomorrow, will delve further into this case for re-engineering innovation.