CEOs Need To Embrace Innovation

Aug. 30, 2006
CEOs must view innovation as a blueprint rather than a brainstorm.

A light bulb overhead may signal a bright idea in cartoons and comic books, but in today's business world companies can't sit around waiting for creative bolts of inspiration. Long-lasting success requires a process of innovation that is predictable and consistent. But here's the challenge: How can that message be conveyed to top-tier executives? What must be done to persuade middle managers to embrace innovation? What's the fastest route to the "innovation buy-in?"

Why Is Innovation Necessary?

Today innovation is necessary to survive. The global market has become so competitive that innovation is now as valuable an investment as sales and marketing. Markets are becoming more global, not less, so the value of innovation will continue to increase. Here's why:

  • Overseas companies have huge advantages over U.S. firms including lower labor costs and government subsidies. U.S. companies can't compete on price -- they must compete on the value that they bring to customers. To do that they must be consistently more innovative than overseas competitors.
  • The best ideas and technologies spread rapidly around the world now. A company with a new product may make a one-time splash, but before long everyone else will have adopted it. A consistent, predictable innovation process enables companies to overcome this.
  • Brands aren't as powerful as they used to be. Experience is now more important than brand name as the basis for a person's purchasing decision.The Internet allows people to share experiences about a company with millions of others. People now choose the products that give them the highest value, not just the best-known brands. Relying on a strong brand name is no longer enough. Consistent, predictable innovation is the answer.

A New View Of Innovation

For too long we've viewed innovation as a creative process that leaps from the minds of imaginative people like Albert Einstein or Steve Jobs. It's time to change that view. Innovation today is a reliable, measurable process that yields dependably positive business results.

Successful innovation means developing new ideas and adopting new product design and production methods that drive significant improvement along the main parameters of customer value. In other words, manufacturers must identify those attributes of a product upon which consumers base their purchasing decisions, and then improve them using new tools and techniques.

Here are five steps companies can take to achieve consistent and dependable innovation:

  1. Create an impetus for innovation that starts at the top. Companies that find the most success usually have an innovation champion in the corner office -- a person with enough authority and respect to topple roadblocks and oblige others across the company to think in a new way. Former Procter & Gamble chief executive John Pepper was one of the first to understand this. He led an effort to train 6,000 engineers and scientists to think in a more innovative way. He felt that if every one of those 6,000 worked 5% more innovatively, the company as a whole would operate much more effectively.
  2. Reform the risk-averse middle manager. Middle managers are often the greatest obstacle to innovation. They're busy doing their jobs, so they don't have time to manage the adoption of a new innovative mindset. Also, their jobs are easier to fill than top executives, so they tend to be risk-averse. CEOs can win over risk-averse middle managers by reducing the risk associated with change. Remember: implementing innovation as a discipline makes it dependable and predictable, unlike the old way of waiting for innovation to strike out of the blue. CEOs must set up incentives for managers to adopt innovative behaviors. They must demonstrate the tools for managers to adopt innovation. And they must constantly support the process with a carrot-and-stick approach enforced from the corner office.
  3. Adopt innovation in every department across the company. Innovation shouldn't be geared solely for the business end, the marketing end or the technical end. Innovation in the 21st century is a process that must involve the whole company.
  4. Hire professional innovators. Years ago, when companies realized the necessity of research and development, they created full-time R&D positions such as CTO and vice president of R&D. Today a similar change is needed with innovation professionals -- people whose full-time job is to drive innovation within the company.
  5. Start "basic training" in innovation. Choose a group of employees to receive professional innovation training and serve as disciples.These teams become centers of innovation excellence that together form a self-sustaining innovation process across the company.

It's time to think about innovation in a new way: as a reliable, measurable process that yields consistently positive business results. Companies such as Proctor & Gamble, Alcoa, Intel and Chiquita have adopted this approach. They realize that the old way of thinking about innovation as a creative, unreliable process is outdated and ineffective. Forget that old light bulb overhead. There's a new paradigm in town.

Sam Kogan is president and chief operating officer of GEN3 Partners, Inc., a product innovation consulting company. Based in Boston and St. Petersburg, Russia, GEN3 helps manufacturers identify the best opportunities for new products and new manufacturing processes and solve the technical barriers to achieving them.

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