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Why can’t ‘modern’ companies innovate?

March 13, 2015

What is a ‘modern’ company? Several large and established companies are starting to define themselves as such – but they seem to be searching for meaning and relevancy. Many stagnating or slow growth companies, struggling for their identity and vitality, use the term ‘modern’ as a way of saying “what we need to do is fast innovation.” ’Modern’ companies change some part of their identity every few years as they search for some path forward. How hard can innovating be over declaring yourself ‘modern’ and ‘progressive’ or even ‘cool’? Ask McDonalds, who, self-definition aside, remains shackled to their old model as evidenced by updating Ronald McDonald in 2014, creating a sort of nondescript clown doing a bad business casual Friday. The public’s reaction was not kind then and the jury is out on how  the recently named new CEO will breathe relevancy back into the corproate body unless he drops sloganering and starts innovating.

Like many people, I watched the Apple Keynote, waiting to see the watch and if it will be another potential hit. It’s easy to see the difference between ‘modern’ companies searching for future relevancy without significant change and those companies defining the future through risk taking on big ideas executed with speed and precision. We recently saw a slow growth company where the internal mantra is ‘crawl, walk, run’. All we could think of was World Champion race car driver Mario Andretti’s quote, “If everything is under control, you’re just not going fast enough.” Similarly, Google’s Larry Page had the right response to a direct’s big mistake. “I’m so glad you made this mistake because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk.”

How do we get a ‘modern’ organization to adopt innovating as their first successful innovation, especially a company deeply committed to a crawl-walk-run risk adverse culture? Do you stay in the group comfort zone by setting up a stage-gate and measured process, even if it slows the pace of innovation, and new hires leave because of the bureaucracy? Innovation it turns out is not a business process; it is intensely social, even for technology. How does a static company jump-start creative thinking? The Diffusion of Innovation concept explores the peer-to-peer social nature of innovation, stressing group adoption over engineered, stage-gated processes. All cafeteria banners aside, the Innovation Leader is not at first an idea harvester or process owner. They are Change Agents, overcoming the collective comfort zone of peer conformity convincing people their first innovation is to innovate.

Late 19th-century surgeons saw themselves as gladiators fighting against illness, wearing their dirty smocks with pride. It was their comfort zone, how their peers acted while fifty percent of patients died from infections. Despite multiple scholarly journal articles stressing the need for disinfecting, peer conformity outweighed innovation. A new generation of German surgeons changed their mindset from illness warrior to scientist, converting their operating theaters into clean, laboratory like environments with significantly better results. When some younger US doctors returned from a site visit with this innovation firmly embedded in their heads, their US peers observed and listened, one at a time and medicine rapidly changed.

Here are five essential steps to convince employees innovating, by itself, is the first innovation:

  • Widely discuss innovating as a verb and not a process, so that, as the Diffusion of Innovation concept lays out, more people adopt the belief they can innovate over the prevailing idea they cannot. Overcome the natural tendency of the crawl-walk-run theory where only 1, 2 or 3 incremental enhancement ideas is accepted as a good starting point.
  • Focus innovation on ideation and evaluation, not the end-to-end new product rollout process, rapidly moving from concept to definition to requirements through testing and buildability discussions. The Innovation process should be two steps – Ideation/Definition and Go/No-Go. Let the existing product organizations figure out the rest.
  • Senior executives should deemphasize control by process, stressing boldness, speed to market and customer amazement. To use another surgeon example –anesthesia took hold so much faster than disinfecting because surgeons were amazed they no longer had to hold down screaming patients.
  • Innovation and creativity come not from a highly structured, rational process, but from unstructured, creative time. The issue may be having process-centric employees embrace unstructured time and activities – can they handle it and can Leadership deal with the loss of control? One way to bridge the process/control to unstructured thinking gap is to provide mental tools, such as Intuit’s Catalyst or Stanford’s online innovative thinking tools.
  • Accept and encourage big risky thoughts, not a “they would never” mentality. Go for quality – 1 blockbuster is worth 10 Ok’s. Adopt Google’s 3rd principle of innovation, ‘aim to be 10 times better’.

This past Friday, the Dow announced they were dropping AT&T from their index, replacing it with Apple. AT&T is a ‘modern’ company, defining today while Apple innovates the future.

Richard Eichen is the Founder and Managing Principal of Return on Efficiency, LLC,  http://www.growroe.com , focusing on companies, initiatives, and products where technology is the primary means of delivery and revenue. He is one of their senior Turnaround, Transformation, Program Rescue and Process Rescue leaders.  As a Change Agent, Trusted Advisor, Program Leader and Interim Executive, Rich has over 25 years hands-on experience reshaping companies, Operations, IT/Systems Integration and strategic initiatives.  He can be reached at richard.eichen@growroe.com, and followed on Twitter, @RDEgrowroe

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