Constant reinvention is the name of the game. Companies that keep finding better and newer ways of doing things to serve in extraordinary ways end up attracting and retaining loyal customers by standing out from the competition.
What companies come to your mind when you think of innovation? 3M? Southwest Airlines? GE? P&G? Apple? IBM? Toyota Motor Corp? Google?
A few traits are common in all Innovative companies. These include plenty of communications across functions between people to facilitate free flow of ideas for improvement, challenging of status quo, and sharing of best practices. Processes are also in place to capture ideas of value and turn them into innovative products and services. Successes and failures are announced and celebrated. Such companies abhor creation of functional silos that inhibit transparency, which gives rise to unhealthy turf battles.
Constant reinvention is the name of the game. Companies that keep finding better and newer ways of doing things to serve in extraordinary ways end up attracting loyal customers by standing out from the competition.
Management literature is flooded with inspiring stories of innovation. For example, Southwest Airlines is known to gather people from its in-flight, ground, maintenance, and dispatch operations to brainstorming ideas to address challenges such as:”What are the highest-impact changes we can make to our aircraft operations? Toyota Motor Corp. is renowned for its obsessive focus on innovating its manufacturing processes. In recent years, Prius has helped Toyota earn even more esteem as a product innovator. Toyota is famous for partnering closely with its suppliers for innovation. They don’t just focus on cutting costs of individual parts, but go further back in the design process to find savings across entire vehicle systems.
In an annual survey of top executives by Boston Consulting Group (BCG), which provides the foundation of BusinessWeek‘s 25 Most Innovative Companies list, more respondents said that innovation spending will be flat or down in 2009 as compared with the ranking which began in 2005. On the other hand, after focusing on shorter-term, lower-risk projects, a majority said they’re satisfied with their returns on innovation investments. But recession and market meltdown aside, many of the corporations on the 2009 ranking are finding ways to forge ahead. Some, such as Procter & Gamble (No. 12) and Vodafone (No. 25), are teaming up with outsiders to share costs. Others, such as India’s Tata Group (No. 13), are taking greater advantage of in-house experts. And a few, such as BlackBerry maker Research in Motion (No. 8), are even increasing their R&D staff.
Companies hire people to add value. Yet, very few organizations create a climate that encourages creativity and innovation. To get the best out of people we need to engage them, inspire them, listen to their deep felt aspirations and discover that what they passionately desire is what your company also needs – ideas of value. To this end, India’s Tata Group is a prominent example of making innovation an integral part of its DNA. It has set up mechanisms for handling new ideas and for making creative thinking a performance criterion.
An age old management saying rings true: ‘what gets measured gets done.’ Consequently, managers in innovative companies are also beginning to develop metrics to measure and raise the productivity of their innovation efforts. Ratio of products that succeed, or the ROI of innovation projects are top of their list. Without clear metrics in place, a fair process cannot be created to reward people or to hold them accountable.
Our past experiences and environment have shaped our attitudes, beliefs and perceptions which we call the “in-box” thinking. Some of the stuff is harmful e.g., having a negative attitude which says things like: “This is impossible”; “It’s never been done before”; “There is no point in trying. My ideas get shot down every time!” If most people in your organization suffer from such a debilitating mindset, God help you! The good news is that people can learn to be more creative and innovative. It is your job to provide everyone, across the board, with that opportunity.
Several major companies in Pakistan have successfully turned around their business in recent years by encouraging a greater sense of ownership and creativity in their people. Organizations like Pakistan Tobacco Company (a subsidiary of BAT, UK), Mobilink (An Orascom Co), State Bank of Pakistan, and Unilever are just a few encouraging examples that come to mind. Of late, an innovative local company, Engro Foods, opened its doors to business three years ago, and in this short time span, through innovative practices, has already acquired a dominant market position in the dairy business of Pakistan.
Many managers, whose performance was previously hindered by blind adherence to outmoded traditional practices, have opened themselves to new and effective ways of saving costs through efficient and effective working practices like employee engagement, greater empowerment and delegation and more participation of their people in decision making. Through re-shaping their corporate cultures, companies are successfully enhancing their top-lines and bottom-lines, improving quality of products and services and gaining market share.
Managers and employees become useful to organizations by using their unlimited creative potential intelligently. One of the most memorable case studies on Japanese management was the case of the empty soap box, which happened in one of Japan’s biggest cosmetics companies. The company received a complaint that a consumer had bought a soap box that was empty. Immediately the authorities isolated the problem to the assembly line, which transported all the packaged boxes of soap to the delivery department.
For some reason, one soap box went through the assembly line empty.
Management asked its engineers to solve the problem. Post-haste, the engineers worked hard to devise an X-ray machine with high-resolution monitors manned by two people to watch all the soap boxes that passed through the line to make sure they were not empty. No doubt, they worked hard and they worked fast but they spent a huge amount to do so.
But when a rank-and-file employee in a small company was posed with the same problem, he did not get into complications of X-rays, etc but instead came out with another solution. He bought a strong industrial electric fan and pointed it at the assembly line. He switched the fan on, and as each soap box passed the fan, it simply blew the empty boxes out of the line!
Another example of innovative thinking comes from NASA. When NASA began the launch of astronauts into space, they found out that the pens wouldn’t work at zero gravity (Ink won’t flow down to the writing surface). In order to solve this problem, it took them one decade and $12 million. They developed a pen that worked at zero gravity, upside down, underwater, in practically any surface including crystal and in a temperature range from below freezing to over 300 degrees C. And what did Russians do…………………?? The Russians used a Pencil!!!
As mentioned before, people are often trapped by traditional thinking – thinking which is logical, sequential and selective, as we saw in the examples of the Japanese cosmetics company and NASA. In traditional thinking one uses judgment, analysis, criticism and argument. While these are necessary they are not in themselves sufficient. Logic is about hindsight. We can all be wise after the event. It’s high time, that we also acquire the ability to be wise before the event!
What can we learn from the TATA Group, the 117 years old Indian marvel that has given the nation its first steel mill, power plant, and airline, among other achievements? 1991 marked the end of India’s long protected industry. At that time, the company’s chairman, Ratan Tata made innovation a priority to help his companies survive and thrive in the fast changing global economy. He decided to build innovation into the DNA of the Tata group. This meant that every employee thought and acted like an innovator. This required a cultural transformation which had to be led by the top executives of the group. They formed a body called TGIF (Tata Group Innovation Forum), comprising a 12 member panel of senior Tata Group executives and some CEOs of the independently run companies. TGIF’s main objective was “to inspire and share best practices”.
People were trained to think about improvement all of the time, by being able to challenge status quo intelligently. Five hours of an employee’s 45-hour week can be used for personal projects, such as learning a skill or developing an idea. To better capture nascent ideas, the company launched IdeaMax, a social network that lets any employee submit, comment, and vote on ideas. Since it was launched last year, IdeaMax has collected 12,000 ideas, several hundred of which have become projects. “Every quarter, I review the top 10 most popular ideas,” says Krishnan. “The wisdom of crowds works for us.”
Without question, it is the CEO and the top leadership team that have to lay the foundations for an innovative corporate culture. This needs to be communicated to managers and whether successes or failures of innovative efforts, these need to be recognized and celebrated.
Having the right people on board, helps achieve breakthrough innovations, but this in itself is not enough. To successfully build a culture of innovation, equal priority must be given to processes and people. For the desired culture to take root, clear systems for approving and funding ideas must be in place, and tangible criteria for innovation must be incorporated into employee performance review processes. Technology should be leveraged by setting up blogs to facilitate two-way communication, horizontal and vertical, between people, for sharing ideas and best practices.
How innovative is your organization? Regardless of what you say, there will always be something you can do that will make a positive impact.
 BusinessWeek: “Is innovation too costly in hard times?” April 09, 2009
 BusinessWeek: “How to Build a Culture of Innovation.” Aug 19, 2009
 BusinessWeek: “How to Build a Culture of Innovation.” Aug 19, 2009