Breaking through the wall

Creative Destruction: When Incremental Innovation Isn't Enough

Oct. 4, 2012
In terms of street pressure, companies have become too near-term-focused and reactive due to quarter-to-quarter financial pressure from Wall Street. Breakthrough innovation requires someone or some group to dream, create a vision of what’s possible, and possess the willingness to do whatever it takes to make that dream a reality. 

Manufacturing CEOs want breakthrough ideas and innovations that will enable their companies to create differentiated market positions. But conventional ideas and organizational approaches to innovation are holding many of them back. One solution is to embrace “creative destruction.”

In the manufacturing industry, and beyond, it is well known that both CEOs and CTOs are simply not destructive enough. This may be shocking to some, but just look at the industrial landscape today and I think we can all agree that most innovation today is incremental at best.

In fact, high-impact ideas still elude most large corporations with most stemming from start-ups or innovation labs. Taking a closer look, most of the developments over the past decade have come from NASA’s space program, nuclear science and energy, wireless technology, Ethernet, computing, medical science and vaccines, to name just some of the most prominent achievements.

Impediments to Innovation

So how why have we come up short on developing truly breakthrough ideas and innovations and what will it take to encourage a 21st century break through?

First, there are number of business dynamics that are creating impediments to high-impact innovation such as street pressure and stagnant management philosophies.

In terms of street pressure, companies have become too near-term-focused and reactive due to quarter-to-quarter financial pressure from Wall Street. Breakthrough innovation requires someone or some group to dream, create a vision of what’s possible, and possess the willingness to do whatever it takes to make that dream a reality.  

In terms of innovation, having Wall Street breathe down your neck all but eliminates the creative angle necessary for new developments in R&D. Such endeavors demand medium- to long-term funding and focus. Corporations today lack the patience and the will to walk that path; hence, output is mediocre. This is not about levels of research and development spending. It is about the will to create a long-term impact.

A company’s management philosophy can truly unlock or block its human capital. The process used to manage companies and the people in them has changed little over the years. Attempts to move away from command-and-control organizational structures and environments have met with limited success. As a result, the passion of individuals is not being unleashed for breakthrough innovation.

Today, there are many ways to drive incremental value. These include using portals, crowdsourcing techniques, internal contests with employees, and institutional partnerships, to name a few. But it is more important to focus on the strategic side to generate game-changing innovations for the business. The process by which a company can manage both of these innovation approaches can be cross-leveraged, with some variations.

Three Ways to Drive Breakthrough Innovations

1. Create an independent “outsider” organization. Creating an organization that is capable of independence and not influenced by existing business units helps to give it the strength that is needed to create big new ideas and pursue them effectively. It will also be necessary to ensure that organizational team members understand that what worked in the past may not work now or in the future, and that success is now defined differently. We have seen many times that the “old boys’ club” wields so much influence that bold experiments never take off; hence, it’s important to have the teams operating with a fresh charter.  

At HCL, for example, we have created a separate group for innovation called Emerging Business Incubators that is run by senior business-unit executives who report directly to the office of the CEO. These teams create business lines that will be disruptive in nature but have high top- and bottom-line impact for HCL. This is enabled by HCL’s philosophy of Employee First, built around an “enable & enthuse” management style that makes it simpler for us to execute innovation projects internally and externally for our customers. The mandate is to think big and create billion-dollar business units, not incremental value. This is funded directly by the CEO’s office and therefore does not conflict with business-unit-owner budgets. As a result, we are able to generate enthusiastic participation in these innovation teams.

2. Encourage naysayers. The teams that select projects from the funnel of ideas for approval must have some naysayers. The reason for this is that you do not want Impactovation teams to get away with incremental innovation. A very good example of this strategy is at one of the leading Japanese car manufacturers. When it introduced a new car model this year, it fell dramatically short of expectations. The company then created a team that had the power to say no to incremental improvements and only approve high-impact designs.

3. Create “potpourri” teams. There is no one way of getting the team mix right. Experimenting with the mix is important to get breakthrough ideas. We have seen that projects run by, for example, a research group did not see the light of the day, but the same projects run by technical engineering teams succeeded. Why? It’s a well-known fact that some of the most creative folks, such as painters and musicians, are in the arts. Their ability to look at things differently, break things into smaller pieces, and then bring those elements together for optimal impact is a great value addition to a team. A work session with this kind of diversity can help everyone think in multiple dimensions and create high-impact designs and/solutions.

Expand time horizons, but continue to measure progress. If the company is meeting objectives and has a future, take big bets and expand your time horizon for returns.  

As Associate Vice President, Consumer Hitech at HCL Technologies, Sanjay Singh is responsible for market facing strategy and operations, new services and solutions concept to launch, and customer experience enhancement. He has over 19 years of global experience in technology and consulting services.

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