WHY AN ORGANIZATION MIGHT TRACK THIS
Questions Answered
- Are creative people attracted to an organization like ours as possible employees?
- Does our culture reward creativity and risk taking?
- Do we hire creative people versus those who always follow the rules?
- Do we have work processes for encouraging creativity?
- Do we have multiple mechanisms for people to submit ideas for new things and improve old things?
- How much of our financial success can be attributed to innovation?
- Do we have efficient processes for operationalizing innovations and getting them to market quickly?
Why Is This Information Important?
If you look at most fields, the most successful companies in those fields are the innovators. Southwest Airlines is a true innovator in the airline business, coming up with a different strategy for an airline that remains successful years later in spite of many copycat airlines that have attempted to rip off their strategy. United has twice tried to come up with their own version of Southwest and both are gone. Remember United Express or Ted? United Express still exists, but it is no longer a direct competitor to Southwest. Coming up with a great and innovative idea is certainly a good way to start a new business, but it often does not take long for a competitor to come along and copy your product or approach. Bose is a company I worked with that is really good at innovation. Some of their products, such as the little cube speakers, the noise-canceling headphones, and the Bose Wave, are still successful and were considered major innovations in audio when they first came out. Other companies have similar and lower-priced products in all of these categories, but most of us still prefer the originalāBose. I almost considered a Samsung Galaxy when my iPhone 4 was in need of replacement, but I ended up sticking with Apple and going for the iPhone 5, which I love. Once again, the innovator won out over the copycat.
Innovation is elusive. Some organizations have a number one hit and never have another one. They come out with one good product that runs its course and are never able to come up with another hit. In the music business, it is hard enough to get one chart-topping song, but doing so year after year for decades is close to impossible. For every Beatles that comes along there are thousands of one-hit wonders. They may even get a Grammy for Best New Artist, and by the next year we have forgotten all about them. For every Monopoly there are hundreds of games that get discontinued after the first season. For every Ralph Lauren or Giorgio Armani who have had more than 30 straight years of success in fashion, there are hundreds of designers whose collections never even make it beyond one short season. Watch for their latest fashions at your local TJ Maxx selling for pennies on the dollar.
Like any other dimension of performance, innovation needs to be precisely measured and managed. Managing costs is pretty straightforward. Managing production or delivery is pretty straightforward, as is measuring these two functions. Measuring and managing innovation is incredibly difficult. Like human capital and some of the other performance dimensions discussed in this book, there are some dimensions of organizational performance that everyone agrees are linked to growth, revenue, and profits, but no one can agree on how to measure them. This does not stop organizations from trying to measure and encourage innovation, however. Most of the metrics Iāve seen miss the mark. They either are not good measures of innovation or they are good measures but we canāt trust the integrity of the data.
People. When you look at organizations known to be really good at innovation, you often find that a huge part of their success is based on hiring the right people. Think of the value of Steve Jobs at Apple, and how a single person can make a big difference. Imagine if you had 2,030 Steve Jobses or potential Steve Jobses? Google and Microsoft both focus on hiring smart people. People with degrees from Stanford, Harvard, MIT, and other top universities are probably really smart, but not necessarily creative and innovative. On the other hand, some smart people find college boring and drop out. You also find that some very creative people never went to college, let alone MIT. You would probably also find that some really creative people donāt score well on intelligence tests and perhaps were C students in school. Any measure of innovation surely needs a people component to it, but rarely is this the case. If there are people measures at all, it is something dumb like the percentage of people who attended your three-day innovation workshop. I am not sure creativity and innovation are even trainable. I guess you could take a completely noncreative person and make them a notch or two better with some training, just like I could take any 20 of your employees and teach them basic guitar skills in a few days. However, none of them are likely to become competent guitar players, and among the thousands of competent guitar players out there, very few can write a good song, and one in a million can write a hit song. Rather than hire smart but not necessarily creative people, it makes more sense to hire people who already have a high degree of creativity and have already written a hit song, or at least have the ability to do so.
Environment. If you visit all the usual benchmarks like Google, Pixar, Apple, Amazon, and Facebook, you will see that their work environments tend to differ from the typical cubicle farm in the middle of each floor with offices around the perimeter. You will see open workspaces, meeting spaces without traditional conference rooms, bright colors, lots of flipcharts and whiteboards scattered about, bulletin boards for posting visuals and ideas, small workspaces tucked in random corners, pool tables, Wii consoles, and all sorts of other things that would look a little out of place in most corporate environments. You might also get the feeling from being in an environment like this that the company really embraces diversity. In other words, there are a lot of different types of people working here, and they all look different. In fact, some of them are downright weird. You might also see an environment where a sense of humor seems to be part of the atmosphere. You might actually hear lots of laughing at work. Both my brother and sister-in-law work for companies like this. My sister-in-law works for Google and has done so for most of her career, and my brother Paul works for a Silicon Valley firm called Duarte Design that puts together major PowerPoint presentations for big meetings. Nancy Duarteās claim to fame is the presentation she developed for Al Gore on global warming, āAn Inconvenient Truth.ā Her firm helps other organizations develop compelling visual-based presentations like this. Both companies (Google and Duarte Designs) have work environments that do not look anything like what I was seeing when working with big traditional companies in New York or Chicago. This type of workplace design is actually quite common in Silicon Valley, however, starting with leading companies like Fairchild and Intel. Hire the right people and put them in a creative environment, and you are already at least 50 percent there in creating an innovation-friendly workspace.
Culture. Related to environment but different is your organizationās culture. I talk about how to measure culture in Chapter 18, and some of that information may be relevant here as well. Some organizations have a culture that rewards risk taking and creativity and some do not. Hiring creative people and putting them in a loft with bright colors and no offices will only lead to innovation if the culture encourages this. I remember working with IBM years ago at their old 590 Madison Avenue building in New York City. The company was in the process of trying to change the work environment to encourage more innovation and get salespeople to spend more time with customers. Several floors of the building were converted to an open environment where employees could sign in, plug in their laptops, and use a workspace, but no one had assigned offices. Meetings occurred in informal conference rooms and the latest furniture from Herman Miller was scattered about in bright colors and retro designs. The place looked really cool and modern. The problem was that it was still IBM. This was after top management had relaxed the blue suit, white shirt dress code, but it was still IBM. IBM is certainly known for some great innovations, but it is also known for being very conservative and kind of stodgy. New furniture and a loft office space by themselves will not change the culture. Few companies I have worked with embrace failure as an opportunity for innovation. In fact, the culture of most companies is that you are one bad decision or failed project away from the unemployment line. Part of having an organization that is good at innovation is having a culture that encourages it. That means it is okay to fail. How many times did that Dyson guy say he redesigned his vacuum before settling on one that works? How many failed inventions did Thomas Edison have compared to successful ones?
Processes. Organizations that are good at innovation are also not bogged down with committees, procedures, approvals, and lawyers whose main focus is to prevent the company from taking a risk. Managing risk is certainly important, and I outline how you might go about measuring risk in Chapter 5. However, speed is usually a major factor. While working with Ericsson back in the day when it made cell phones, I recall that the new product development cycle took about twice as long as Nokiaās. By the time Ericsson came out with a new phone it was old news. Seen many Ericsson cell phones lately? It sold its cell phone division to Sony years ago, but I donāt recall seeing many Sony cell phones lately, either. Processes have a huge bearing on innovation and the ability to get products to market quickly. Organizations known to be good at innovation have work processes that make it easy for employees to submit ideas, get feedback on those ideas, and perhaps turn the ideas into prototype new products and services. Rapid innovation is an important business trend right now, because you have to jump on opportunities quickly before the market window closes or some competitor gets there before you and scoops up the market. Part of work processes that relates to innovation is focus. One of the big points of Steve Jobsās approach to running Apple was that the company had a singular focus. The iPad consumed almost all of the employeesā attention and resources for new products until the products were released. Apple does not try to release 20 to 30 new products each year like some technology companies do. It tends to do one big one every year or two and make sure it is a game changer. The new iPhone 5 with personal assistant Siri is a pretty big improvement over the 4 or 4s versions. However, the first iPhones were the real game changers. There was nothing remotely like them at the time. Focus is part culture and part processes. Some companies just have focus as part of their DNA, whereas others always seem to struggle with this. My clients that grapple with focus seem to be afraid they wonāt succeed if they donāt continue working on 25 new things at once.
There are a lot of organizations that do not need an analytic measure that looks at innovation. For many successful companies out there innovation is not a key success factor. Copying someone elseās business model or strategy and doing it cheaper can be a very effective approach. A lot of smaller companies, for example, wait for the big corporations to do their market research and start building a new store or location before competitors start building one nearby without having to pay for any market research. I read that this is how Motel 6 builds new motels. It waits until Holiday Inn or a low-end Marriott property starts construction and then Motel 6 finds its own site nearby. There are a lot of organizations that just need to do their job and not worry about being creative or innovative. Innovation certainly has its place in health care, and there have been many innovations in recent years in treatments. However, if you are running a chain of 20 urgent care clinics you probably donāt need to start measuring innovation. Just become more efficient and effective at seeing and treating patients.
The organizations tha...
