Selasa, 15 Desember 2009

Strengthen Your Innovation Muscles


by : Scott Anthony

The economic shock that rocked the global economy late last year put to rest any lingering doubts that business as usual would be sufficient to compete in the 21st century. Surviving, let alone thriving, requires grappling with constant change. Thus, mastering innovation has moved from a strategic nicety to a strategic necessity.

Unfortunately, the increasing importance of innovation creates a challenge for many companies. Companies that have focused on continual improvement or operational effectiveness have seen their innovation muscles atrophy. Leaders face the daunting challenge of strengthening those muscles at the exact time when markets and managers are most impatient for near-term results.

The good news is two decades of academic research and field work with companies across a range of industries provide clear guidance for companies seeking to move in the right direction.

Patterns and Principles of Successful Innovation

Although many perceive innovation to be random and unpredictable, well-grounded research by Clayton Christensen, V.G. Govindarajan, Rita McGrath, Richard Foster, Rebecca Henderson, Robert Burgelman and many others suggests there are patterns of success and failure. Field work by dozens of companies to put those patterns into practice has illuminated straightforward principles that bring great clarity to the apparently fuzzy world of innovation.

The following five principles can help companies meaningfully increase their odds of innovating successfully:

1. Start with the job to be done. People don’t buy products and services; they hire them to get jobs done in their lives. As management guru Ted Levitt told his students a generation ago, “People don’t want a quarter-inch drill — they want a quarter-inch hole.” The quest for innovation oppor tunities or talent solutions should always start with an important problem that can’t adequately be solved today.

2. Remember quality is relative. In a perfect world, companies would make products that function flawlessly, are simple to use and are affordable. The unfortunate reality is the world teems with tradeoffs. When companies innovate, they have to choose which performance dimensions to prioritize and which to de-emphasize. Companies get into trouble when they project established views of quality onto employees. In reality, many customers would happily trade off raw performance to receive something simpler, cheaper or more convenient.

3. Look broadly to change the game. People assume innovation means new and improved features or work processes. That is only one type of innovation. Companies need to consider broader innovation levers, such as new marketing approaches, revenue models or organizational teams and procedures.

4. Assume the first stra tegy is wrong. When talent leaders are truly moving in new directions, the only thing they can be sure about is that their first idea is wrong in some meaningful way. A key to success is to find quick, cheap ways to test the underlying assumptions behind success and how to achieve it. Then leaders must be ready to correct their course.

5. Capabilities define disabilities. Even the best-run companies have weaknesses and blind spots. Companies that don’t organize talent in the right way may watch a steady stream of seemingly sensible decisions morph a novel idea into something familiar to the core business. Developing transformational ideas requires selectively borrowing some assets from the core business while forgetting others.

These principles help with more than the creation of new products or services. For example, at the heart of Toyota’s ability to constantly improve its operating processes is a relentless focus on experimentation and iteration. Unders tanding that quality is relative can help companies design internal processes that deliver along dimensions that are critically important to internal stakeholders.

An example of a company that “lives” these principles is Amazon.com. The company’s innovation efforts always start with a problem the customer can’t adequately solve. It then builds solutions to solve those problems. Recognizing that innovation efforts are fraught with risks, it tests ideas in the market quickly. And it lets the customer — not its own capabilities — drive the business.

Consider, for example, Amazon’s Kindle e-book reader, an embedded system for reading electronic books. It was clear to the company that its customers were going to look for a way to read books on the go. Amazon historically didn’t play in the hardware business, so it had to develop an entirely different set of skills. And it didn’t just create a compelling device; it built a business model that makes it incredibly easy for customers to get new content.

Amazon Founder and Chief Executive Officer Jeff Bezos said the customer and the problem has to be at the center of the innovation equation.

“It is much easier for us, and I suspect for many companies, to start with your skills and work outwards. But that doesn’t allow you to do certain kinds of things,” Bezos said. “If you want to really continually revitalize the service you provide the customer, you can’t stop at, ‘What are we good at?’ You have to ask, ‘What do our customers need and want?’ And no matter how hard it is, you better get good at those things.”

Put Patterns Into Action

It’s one thing to understand these principles. It is another to put them into action. Sometimes companies pause because they fear innovation requires massive investment, huge amounts of risk and the creativity of Apple’s Steve Jobs. That need not be the case. Embracing the tips described be low can help companies make significant strides in their innovation journeys.

Start small. Just like a project’s strategy is uncertain in the beginning, unforeseen obstacles will impede capability-building efforts. Instead of trying to reinvent an entire organization overnight, start with a project team or focused division. Use the small starting point as a way to test out key assumptions and earn the right to increase innovation investments.

For example, earlier this decade, Procter & Gamble (P&G) thought it would be valuable to develop a more systematic capability to use the principles detailed above to build a capability around what it came to call “disruptive market innovation.” CEO A.G. Lafley said a disruptive innovation “creates new categories, new segments or entirely new sources of consumer consumption.”

P&G didn’t build a massive infrastructure or start dozens of disruptive projects. It ran a two-day workshop with a hal f dozen project teams that seemed to be moving in disruptive directions to see if a more disciplined approach would be valuable. After three years of iteration, corporate leaders asked each division to develop a plan to allocate a portion of their innovation resources toward these disruptive efforts. The carefully staged approach allowed P&G to better manage its risk in the capability efforts.

Focus early efforts. Companies seeking to develop their innovation capabilities sometimes try to run broad-based efforts to energize the organization. They gather large groups of people in a room and announce, “It’s innovation time.” They tell employees all ideas are welcome, sit back and wait for brilliant ideas.

This approach almost never works. Instead, companies should carefully consider where innovation efforts will bear the most fruit. Maybe there is a particular customer segment the company is struggling to reach. Or maybe the company needs to find a way to counteract a competitor creeping up from the low end of the business.

Early focus doesn’t have to be on growth opportunities. Particularly in this tough climate, companies can look for innovative ways to rethink current processes, do more with less or make prudent cost cuts without alienating key staff members.

These programs might not sound as sexy as creating the next iPod, but they can be critical components to a smooth-functioning core business. And an in-control core business is a necessary prerequisite for innovation.

Similarly, companies should make sure the objectives of their efforts are clear, and they should clearly spell out what options are on and off the table. These kinds of constraints can focus creativity and lead to better outcomes.

Invest in capabilities. While innovation is more predictable than many perceive, it still requires acting and thinking differently. Companies seeking to develop their innovation muscles need to invest in programs that can give managers the tools and mindsets to support thinking and acting differently.

In 2007, for example, agrichemical giant Syngenta created a customized hands-on training program for intact teams working on disruptive projects. The program blended some of the foundational concepts discussed above with Syngenta-specific case studies. During the past 18 months, Syngenta trainers have helped about a dozen teams develop their innovation skills.

Investments in creating a common language also can pay big dividends. For example, in the late 1990s, Clayton Christensen went to microprocessor giant Intel nearly 20 times to educate managers on his research findings. He estimates managers used the concepts to launch businesses that today contribute close to $15 billion in revenues.

At one point, Christensen asked Andy Grove, then Intel’s chief executive officer, to explain the value the models provided. Grove said, “It gave us a c ommon language and a common way to frame the problem so that we could reach consensus around counterintuitive courses of action.”

Developing training modules that build common language or specific skills, developing internal networks of advocates and running idea-generation sessions with a cross-functional group of managers can be useful starting points to create a team of well-muscled innovation players.

Today’s economic climate means companies must become world-class at grappling with constant change or suffer the consequences. Fortunately, companies can draw on well-grounded principles to strengthen their innovation muscles. Starting small, focusing efforts and investing in capabilities can help companies dramatically increase the odds that their innovation efforts will pay off.

Scott Anthony is the president of Innosight LLC, an innovation consulting company and the lead author of The Innovator’s Guide to Growth.

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