How Do Apple, Ford, and Microsoft Survive In The New Economy While Others Crash?

Aug. 7, 2010
Why innovation is the key component for dealing with the new economy.

Six out of ten new businesses fail. Unemployment isn't getting any better. The housing market is bracing for another bump in the road next quarter. And, as if the cake needed icing, the FDIC reports that about half of America's banks -- including the four largest -- are on the bubble, and may fail by the end of the year.

As serious people, at equally serious companies, search for ways to prosper -- or just survive -- in this bleak economic environment, I urge organization leadership to focus on a principle that is often overlooked in hard times: innovation.

The equation is simple: innovate or perish. At every major crossroads in the history of American business, innovation has been the driving force behind the companies that made it through the bad times. After all, as we all look for the hot new product or the 'killer app' in our respective industries and professions, we tend to overlook the fact that someone has to create or invent it first.

Whether it is a multinational corporation or an entrepreneurial startup, innovation can help a business launch, recover or overcome even the greatest of competitive pressures. If you are a manufacturer, distributor, service provider, supplier, retailer or even a not-for-profit, the pressures of today's new economy are worse than anything the business world has seen for decades. So, how do you get through it?

Look at the companies that are prospering, despite the economy. Apple, Ford, Microsoft and others didn't stand pat as the economy crashed. They reinvented themselves and their product and service lines. After falling behind to Japanese competition amid the GM bailouts, Ford went back to the drawing board on their line of cars and emerged stronger than before, having one of their best quarters ever. It wasn't layoffs or the mitigation of risk that accomplished that. It was innovation, creating something new to satisfy its customer base.

Companies need to expand their notion of what, exactly, is meant by "innovation." When people think of innovation, many of them think of simple brainstorming for ideas. This is a fallacy. Brainstorming is just one small element of a much larger process. Innovation is NOT a tactic.

Rather, it's an ongoing process and "if businesspeople follow the right steps, they can achieve innovation regularly -- not just when someone slips on the soap in the shower and the next killer app just comes to them as they put ice on the bruise on their head.

But, how does one develop that process. That's the key. It's all about building sustainable innovation -- not just to come up with the big idea to pull you through the next quarter, or year, but on into the future.

I recommends 10 rules, or imperatives, to govern that process. These are not only doable, but necessary for survival in today's highly competitive marketplace. Whether you represent a brand owner or supplier you know that recessions cut into budgets, and often the first thing to go is the R&D budget. Sure, patents are a controllable expense. But remember this: innovation is the secret to outperforming the competition. When the going gets tough, cutting innovation for the sake of short-term expense control erodes our competitive edge and only our competitors stand to benefit.

As stated in Robert's Rules of Innovation, the key imperatives to creation of a successful, lasting innovation strategy are:

  1. Inspire
  2. No Risk, No Innovation
  3. New Product Development
  4. Ownership
  5. Value Creation
  6. Accountability
  7. Training and Coaching
  8. Idea Management
  9. Observe and Measure; and
  10. Net Result and Reward

These 10 rules are the cornerstone of innovation programs that deliver profitable growth through innovation, he said. "Like the original 'Robert's Rules of Order,' understanding 'Roberts Rules of Innovation' will help you intelligently create order from the chaos imposed by today's misguided slashing of R&D budgets.

But where to begin? Start with the question: How inspired is your organization?

From the CEO's suite to the rank and file, does your company encourage inspiration and welcome vision across the organization? Sustainable inspiration is vital to continued growth of the organization, but you must first identify its source within your organization and channel and nurture that wellspring.

Where does the inspiration exist within your organization? In my experience, inspiration extends from the CEO to the customer service help desk, from the factory floor to the retail showroom, from the longest-tenured employee to the newest hire and all the way to the customer visiting your web site. No one in the organization deserves a pass from thinking creatively about how to improve the company, its products or its processes.

Seven Steps for Inspiration that Builds Innovation

Inspiration remains the spark that drives the creative process. As your organization works towards its goal of profitable, sustainable innovation, I suggest these seven tips:

Make Inspiration An Imperative

In Robert's Rules of Innovation, Brands wrote that successful innovation in an organization is fueled by many imperatives: leadership, ownership, accountability, risk and reward and value creation, for example. None is more important, though, than inspiration. An inspired leader engages the team, and heightens chance of success.

Identify and Empower a Chief Innovation Officer

The processes of inspiration and innovation need a champion, someone who helps develop the ideas, fosters an environment that encourages creativity, camaraderie and esprit de corps, and steers the organization toward greatness. The CIO-not to be confused with the chief information officer-is the inspiration quarterback, the team leader who has the authority to drive projects through the pipelines.

Set Shared Goals

Where do you want your organization to go today-and tomorrow? Though the CIO is the leader (after the CEO or other top executive), the team must embrace the challenge as a shared goal to be met together.

Create the Culture

Inspiration is bigger than an individual; it permeates the organization.Successful inspiration that fuels innovation transcends hierarchy and silos. It's not "just" the CIO's job. It needs to be embraced by everyone. Together, the team enjoys success and learns from the lessons of failure.

And Not Just for the Near-Term

Life and business are littered with uncompleted tasks. Inspiration that leads to innovation is a project that must be seen through.

Observe, Measure and Know

Inspiration-like innovation itself -must be measured to gauge performance and ensure success. Each project team must have a leader who shepherds projects to their respective waypoints and end goals.Create processes and milestones and establish checkpoints to weigh accomplishments.

Never Relent

Inspiration is a life-long calling. My old boss, Herb Kohler, the inspired, ingenious chairman of the plumbing fixture company that bears his name, still heads his company's monthly new product development meetings-that is, when he's not collaborating with legendary golf course designer Pete Dye. At a time when his peers are kicking back and enjoying the fruits of their labors, Kohler remains committed to his company's NPD and the inspiration behind it.

Inspiration and Your Culture of Innovation

The importance of inspiration in creating and/or enhancing your culture of profitable, sustainable innovation cannot be underestimated. Remember, that inspiration is but one of the imperatives that serve as the foundation of your innovation initiative. said Brands.

These rules must be understood, implemented, maintained and fiercely protected in order for your innovation program to succeed -- even in the face of tremendous economic pressure to cut costs.

For your business to out-maneuver the competition -- like winners such as Apple, Ford and Microsoft continue to do -- we must challenge ourselves to value and foster sustainable innovation.

Robert Brands is the founder ofBrands & Company, LLC, an international consultancy dedicated to helping business leaders create sustainable innovation programs that deliver profitable growth. "Robert's Rules of Innovation" was written with Martin Kleinman, a New York-based writer and marketing communications specialist.

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