The paradox of innovation in the corporation

I’ve spent a lot of time with customers this week at our European users group.  Its amazing to me all of the wonderfully interesting things that our customers are doing with our products.  It was also amazing to me how much the message of innovation has taken hold. 

I guess the ‘stickiness’ of the innovation message should be no big surprise as everyone from Business Week to IBM has it splashed in front of business leaders everywhere they turn.  Its also a welcome relief from the consuming focus on cost cutting that most companies had displayed prior to the innovation meme.  Cost cutting has not gone away by any stretch of the imagination, but now it has become assumed, much like quality before it.  However this shift to a focus on driving innovation into a companies products and the processes around those products creates to challenges that seem to be unique, at least compared with the two prior focus areas (quality and then cost).

The first is metrics.  When measuring quality, there emerged a set of clear metrics by which you could judge whether you were improving quality or not.  Six Sigma methods, recall statistics, fist article inspection all went in to the tool bag of the quality gurus.  Once the metrics had been widely established across the industry, it has became easier to justify investments that would improve quality based on numeric improvements in the indicators.  If you bought X it would increase/decrease metric Y by Z%.  This correlation became second nature to the vendors offering products and services as well as the consumers of them (the manufacturers themselves).  This seems to be more difficult for innovation. 

There are the odd reports of a true measurement of ‘return in innovation’, but these seem to be more the exception rather than the rule.  The default position, or at least thought in the back of the executives’ head is “we could have gotten there anyway…the investment had nothing to do with it.”  What drives this difference?  I think one root cause is that the outcome of innovation can be so very different in different industries.  A dollar of cost savings in retail is the same as a dollar of cost savings in finance and a dollar of cost savings in manufacturing.  However, because the tie to the dollar of upside is harder to make for innovation, we resort to different measures: time to market, closeness to customer requirements and % of revenue from new products.  And the impact of these metrics is different between retail, finance and manufacturing, so its hard to share practices and measure between industries.  There are too many silos in innovation.

The second is the innovation process itself.  At the core of innovation is creativity.  Not to confuse innovation (the combination of mostly existing and some potentially new technologies applied to solve a particular customer need) with invention (the creation of new technologies or knowledge).  There is a fundamental need for tools that ‘get out of the way’ of the truly creative to let them do their work.  Counterbalancing this need is the need to harness the output of the truly creative to produce results for the company that employs them.  How do you get out of someone’s way and harness them at the same time?

The Legend Trip video

One answer is the concept of open innovation, which pushes for the acquisition of technology from those outside the company who need a different business model as well as the dispoistion of technologies that don’t fit the company’s business model.  I believe this is an answer to the harnessing creativity problem because it decouples the creative process from the management process.  Creators create and managers manage.  The basic assumption that underlies the open innovation model is that there are creators that are creating things that need to be created and that there are managers for all of the new ideas.  Its true that there is a feedback loop between the two, but it is only financial.  Ideas that get bought will cause more ideas of the same kind to get created.  Ideas that don’t get bought will not generate any followers.

Another answer is building tools that are more closely coupled but that first and foremost add value to the individual in each role.  Give tools to the creative that let them create in such an intuitive fashion that any ‘management tax’ will be far outweighed by the benefits of the tools.  Give tools the project managers that make their job easier and they will be happy to feed it with information that benefits others.  Give executives tools that let them monitor performance and make changes that will give the company better prioritization.  And a really new idea: give tools to the rest of the company to help them tap into their creativity.  You have to stick to the same rules though: the general use innovation tools have to add value to them in their existing jobs, not be seen as a corporate tax.

If innovation is to join the ranks of the corporate memes before it, these problems have to be solved.  The language and metrics of innovation have to get closer to cash and more homogenous acorss industries.  And we have to get tools that are closely coupled and add value to each of the users. 



PS – Truth be told, this is my second attempt at this post.  The first was lost when I was almost done with it, and put my TC4400 in hibernation mode at the end of a flight, only to discover that the next time I started it up, it couldn’t open the hibernation file it had saved.  Lesson learned: save all data in applications that don’t do it automatically (which Windows Live Writer apparently doesn’t…I guess it is a Beta).  SO, hopefully this will be at least as good as the last one.  I guess I am the only one who will know for sure.  Either way it is definitely the longest post I have done.






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