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PART I
SETTING THE STAGE
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CHAPTER 1
Blinded by the Light
VISION BLOCKAGES
The Key Dangers
ā¢ Nobody understands why innovation is important.
ā¢ Nobody is really sure what innovation really is.
ā¢ It is unclear what kind of innovation we are pursuing.
ā¢ People donāt see why they should participate.
ā¢ People donāt feel that innovation has anything to do with them.
OVERVIEW
A start-up begins life as a single-minded entity focused on innovating for one set of customers with a single product or service. Often as a company grows to create a range of products and/or services, the organization can start to lose track of what it is trying to achieve, which customers it is trying to serve, and the kind of solutions that are most relevant and desired by them.
Jack Welch, former CEO of General Electric, once said, āGood business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.ā
Vision is about focus and vision is about the āwhereā and the āwhy,ā not the āwhatā or the āhow.ā A vision gives the business a sense of purpose and acts as a rudder when the way forward appears uncertain. An innovation vision is no less important, and it serves the same basic functions. An innovation vision can help to answer some of the following questions for employees:
ā¢ Is innovation important or not?
ā¢ Are we focusing on innovation or not?
ā¢ What kind of innovation are we pursuing as an organization?
ā¢ Is innovation a function of some part of the business?
ā¢ Or, is innovation something that we are trying to place at the center of the business?
ā¢ Are we pursuing open or closed innovation, or both?
ā¢ Why should employees, suppliers, partners, and customers be excited to participate?
When people have questions, they tend not to move forward. For that reason it is crucial that an organizationās leadership has a clear innovation vision and clearly and regularly communicates it to key stakeholders. If employees, suppliers, partners, and customers arenāt sure what the innovation vision of the organization is, how can they imagine a better way forward?
You have to make sure that stakeholders know not only that innovation is important to the organization, but also what innovation means in their organization and how they can participate. Otherwise, how can stakeholders be expected to make any significant contributions to the innovation success of the organization?
For companies seeking to move innovation to the center and become an innovation-led organization, senior leaders must first clearly communicate this vision, this intention, and then lay out a plan for how they envision making an innovation-led organization a reality. An effort to move innovation to the center is best led by the CEO, but it requires the support and involvement of the senior leadership team to tell the stories to employees and customers about what the organization is trying to achieve, what innovation means to their organization, and how the employees and other stakeholders can participate (see Figure 1.1).
Figure 1.1 Venn Diagram
Innovation Vision Example (Alcatel-Lucent)
Some companies even go so far as to publish their Innovation Visions on their public web sites. For example, here is Alcatel-Lucentās Innovation Vision:
Innovation is at the heart of Alcatel-Lucent.
Within Alcatel-Lucent, innovation is achieved through the efforts of scientists, researchers and engineers who work together to mesh what is possible from science and technology with what is required by the markets.
Alcatel-Lucent is the most powerful innovation engine in the industry, leveraging its unrivalled depth, breadth and global footprint to deliver the best communications products, services and solutions.
At the core of this innovation engine is Alcatel-Lucentās Bell Labs, a world-renowned and distinguished research organization whose role is to:
ā¢ Conduct fundamental and applied research in domains where the impact on communications will create significant competitive differentiation and often yield game-changing innovations;
ā¢ Anticipate, explore, and de-risk technology evolutions;
ā¢ Generate and deliver innovative product ideas, components and architectures;
ā¢ Support business and marketing by advancing the companyās thought-leadership in the global technical and science community;
ā¢ The Alcatel-Lucent research community also incubates āstart-up-likeā projects targeting the commercialization of truly disruptive technologies and products.
We invite you to explore this Web site to learn more about our innovation engine and how it is transforming the nature of communications and networking. (From International Fund for Agricultural Development [IFAD] web site).
Translated into English, Alcatel-Lucentās Innovation Vision is to create technology innovation in the area of communications products. Their Innovation Strategy for achieving this vision is to use Bell Labs to do fundamental and applied research along with technology commercialization. If I should be an employee in this organization outside of Bell Labs (or a supplier or customer) and I read this web site, I would probably get the message that innovation is not for meāthat itās not my job.
Innovation Vision Example (Kuwait Petroleum Corporation)
Here is the Innovation Vision for the Kuwait Petroleum Corporation (KPC):
Develop . . . comprehensive long-term plans and programs for the investment in research and development. Strengthen the coordination with local research institutes and organizations on studies, research, and information related to the oil industry.
Translated into English, KPCās Innovation Vision is to focus on technology innovation through internal and external research. Their Innovation Strategy includes five phases dedicated to:
ā¢ Phase 1: Research and Development Infrastructure.
ā¢ Phase 2: Technology Process Design.
ā¢ Phase 3: Value Optimization in the Oil Sector.
ā¢ Phase 4: Learning and Knowledge Sharing.
ā¢ Phase 5: Information Technology (IT) Infrastructure.
If Iām an employee in this organization outside of R&D and I see this, I probably get the message that innovation is not for meāthat itās not my job. But if I am a local industry expert or researcher outside the organization, then I may reach out to them.
There Is No Single Innovation Vision
There is no one right answer when it comes to defining what innovation means for an organization. Each organization is going to be at a different stage of innovation maturity, both now and in the future, and must select both the appropriate definition for the term innovation and the vision for where they hope their innovation efforts will lead.
Even more important to remember is that no single innovation vision is timeless or appropriate for all situations. It is incumbent upon senior leaders to recognize when the current or future state of the market or customer requirements will require a change in the organizationās innovation vision. When such a need arises, senior leaders must make the appropriate changes to the innovation vision and communicate the new innovation vision (and the reasons for a change) to all of the key stakeholders.
There are many examples of companies that have either failed to maintain an innovation vision or have pursued a particular innovation vision long past its relevance in the marketplace. One such example was the Ford Motor Company in the 1920s.
Innovation Vision Case StudyāFord Motor Company
Most readers will be very familiar with the legend of Henry Ford and his popularization of innovations such as the modern assembly line and vertical integration. The assembly line was so transformational that companies without it often were choosing the quickest path to bankruptcy. To put the impact of the assembly line into context and the dominance of Ford into numerical terms, of the roughly 200 American carmakers in 1920, only 17 were left in 1940. That means that more than 90 percent of the automakers in the United States went out of business during those 20 years.
If we look at the situation as the United States entered the 1920s in deeper detail, it is amazing to note that by the end of 1919, Ford was producing 50 percent of all cars in the United States and 40 percent of all British automobiles. Amazingly, by the end of 1920, half of all cars in the United States were Model Ts. That is an incredible domination of a market by a single company and an even more amazing feat for a single product.
In 1921 Ford produced more than one million cars, nearly 10 times more than Chevroletāthe next most popular brand. Ford dominated the next five years too (from 1922-1926), selling more than seven million automobiles. Then in 1926 something happened. Chevrolet nearly doubled their sales from the year before, while Fordās own sales dropped nearly 15 percent. The following year (1927) Fordās sales dropped an astounding 75 percent and Chevroletās sales nearly doubled again, meaning that Chevrolet outsold Ford that year by a nearly 3-to-1 margin (1 million versus 367,000). Chevrolet outsold Ford by a 2-to-1 margin in 1928 too. So what happened in that period between 1926 and 1928 when Chevrolet first began challenging Fordās dominance?
When the 1927 model year Cadillac LaSalle rolled out in 1926, it was the first production automobile designed by a professional designer. Harley Earl was hired first to create the LaSalle and then to create the industryās first full-time in-house design studio, which Earl headed for the next 30 years. Considered the father of automotive design, Harley Earl had been customizing cars for a Los Angeles dealership selling to Hollywood stars when he met Alfred P. Sloan, Jr. and the rest, as they say, is history.
General Motors established the industryās first in-house design studio, and Harley Earlās design influence spread to many more GM automobiles in 1927. But design wasnāt the only thing that drove Chevroletās phenomenal growth beginning in 1926. Alfred P. Sloan, Jr. became CEO of GM in 1923 and began realizing his vision of āa car for every purse and purpose.ā Sloan divided the U.S. motor automobile market into segments by price range. Each GM brand became focused on one segment, with Chevrolet at the bottom and Cadillac at the top. Meanwhile, rival Ford stuck to a single model, the low-end Model T.
Besides design and market segmentation, the other innovation that GM unleashed on the automobile market was the General Motors Acceptance Corporation (GMAC). In 1919, the first branch of GMAC was opened in New York City, along with branches in San Francisco, Toronto, Detroit, and Chicago. In 1920 GMAC expanded outside of North America with the opening of a branch in Great Britain. GMAC was formed to provide GM dealers with the financing they needed to maintain their vehicle inventories, as well as to give dealers the ability to finance retail customersā new vehicle purchases easily and conveniently. By 1928 GMAC had already financed four million new vehicle purchases. Meanwhile Henry Ford ...
