My interest in business innovation
started after talking to people inside company I advised. As I was introduced, I started to see invisible light bulbs go on over people’s heads, all saying… “please ask me, I have ideas”.
But for my client, sophisticated service organisation, its first place to look for new ideas was from outsiders, not from inside the company.
It set me on the path to see how businesses can be more innovative at solving problems and creating their own opportunities. The premise was:
1. Most good ideas already exist in most businesses; they’re in the heads of staff, managers, customers, and suppliers, those with direct stake in the business.
2. Few businesses have process to find, create, nurture and execute these ideas. The result is vast storeroom of lost ideas, missed opportunities and an abundance of frustration and unsolved problems in the workplace.
The origin of brainstorming
Our current fixation with innovation programmes seems like modern concept but let me put it in an historical context.
In 1938 Alex Osborn defined process to help teams of people inside his advertising agency to use their “brain to storm” through problem. He thought too much time was wasted in meetings that produced few new ideas.
Although it has taken on the meaning of creativity, the original purposes of brainstorming were:
1. Improve the quality of decision making in meetings by getting people to contribute their ideas.
2. Improve communication with the team of people.
Around 1940, the US government realised that it had to improve its industrial capacity to supply the war effort. national consulting service was set up and then abandoned as it wasn’t able to deliver systematic results across the country. In its place “Training Within Industries” (TWI) programme was created to maximise its impact on the production of the nation. It was train-the-trainer programme to cascade across the country.
Creative gate keepers
It focused on three areas and targeted supervisors and management, who were seen as the major inhibitors of productivity:
1. Job Instruction Training taught supervisors the importance of proper training for the workforce and how to provide the training.
2. Job Methods Training taught how to generate and implement ideas for continuous improvement.
3. Job Relations Training taught leadership and human relations.
What goes around
When I first read this I was amazed. This could be the latest theory on managing knowledge workers. When did we forget these lessons?
After the war, the biggest threat to the USA was that devastated Japan could go the route of communism. To prevent this, TWI was exported to Japan and over the next 25 years, 10 million Japanese managers were trained to deliver these principles within their organisations. This excludes large number of major companies which developed their own programmes modelled after the TWI initiative.
The innovate debate
To bring this into the present, PriceWaterhouseCoopers UK (PWC) recently studied the factors that help organisations innovate.
By innovation, it focused on the ability to commercialise new ideas. The biggest surprise, according to the author Trevor Davis, was “That there was such close relationship between innovation and financial performance. We found that those major companies that were generating more than 80 percent turnover from new products and services at least doubled their market capitalisation over five year period.”
A major finding was that trust in and between management is the single biggest difference between the high and low performers.
Davis noted, “The top performers empowered individuals to communicate and implement change to turn strategic aims into reality. The low performers do not.”
PWC’s conclusions for long term profitability were twofold:
1. The only way to do better than competitor is by doing something noticeably different.
2. The ability to innovate, to learn and change, is the hallmark of lasting corporate success.
Studying innovative thinking
The 300 companies studied were large multinationals, part of the Times 1000, including Gerber Foods, IBM, Johnson & Johnson, Nike, The Post Office, Bayer and Shell Research.
An industry measure was used to look at the factors that hinder or enhance capability for innovation. Much focus was on launching new products and services but the research found strong correlation with those companies that continually commercialise new ideas with the ability to also focus ideas on internal systems and process. The very top companies can apply new ideas anywhere and anytime, be it to conceptualise new products or to enhance internal processes.
Brains before technology
It also dealt with some myths such as that certain industries are more innovative than others. Some people mistakenly think that technology and innovation are linked. They may be. Innovation is rarely technologically driven. R&D may be driven by technology, but what drives scientists to be inquisitive, curious, or creative, to find new, unique or original solutions to challenges? These are the people management issues.
These top performers can turn over their whole product and service portfolio every five years and innovate broadly across the entire business. How do they achieve this?
The most innovative businesses make innovation priority at board level, releasing risk capital whenever and wherever it is needed to support bold ideas. They continually examine where they should focus innovation efforts for maximum benefit and are passionate about what they do and how they do it.
The survey reveals the 10 characteristics that separate the highest performers from the lowest, with trust as the number one differentiator. These 10 factors are grouped together as three underlying capabilities.
A. Idea Management Processes
These high performers focus on developing critical underlying capabilities that underpin their success and distance them from the competition. The top 20 percent in the survey turn their ideas into action via well defined idea management processes which:
1. Seek ideas and knowledge widely from customers, suppliers, employees, other industries and competitors.
2. Allow ideas and knowledge captured to be shared, stored in user-friendly form, and made freely accessible.
3. Actively encourage diversity of viewpoint, talent and expertise.
4. Delay the premature evaluation of new ideas by giving managers considerable discretion to pursue ideas without subjecting them to formal appraisal.
B. Shaping Creative Climate
Innovative companies give life to their ideas by creating climate which encourages ideas to flow freely by:
5. Developing and promoting people who share common set of values and using both values and competence as criteria for appraisals.
6. Using carefully designed reward and recognition systems to reinforce management behaviour that encourages innovation.
7. Training managers to support as well as challenge and to coach rather than direct, creating climate more favourable to innovation.
C. Balancing Leadership and Delegation
A good balance between leaders and followers is crucial to an innovative workplace. For the highest performers this means:
8. Defining which decisions can be taken unilaterally and which are based on consensus.
9. Recognising and rewarding people who take the lead in encouraging others to challenge current ways of working. For example, sponsoring and protecting mavericks.
10. Using HR processes which recognise that leadership roles are often separate from management positions, and therefore promote role models at all levels of the organisation.
Creating your agenda for innovation
The gap between the innovation performance of the top and the bottom is startling and significant. Joining the top performers involves fundamental changes in how you view innovation. At board level, it starts by closely questioning and challenging your own