Driving Eureka!. Doug Hall
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Innovation Requires a Flip of Mindset
It is rare that anyone loves their existing innovation system. Despite what some may think, no one gets up in the morning and says, “I love to work in an inefficient bureaucracy.” Rather, they feel they have no choice because they don’t feel they can change the system. They follow the rules of the system because, frankly, they see that as less painful than trying to work outside the system.
What’s ironic is that while companies are addicted to cost cutting, there is probably no greater waste of time, energy, and money than inefficiencies within the existing systems regarding how new ideas/innovations are supposed to occur.
Upgrading an innovation system requires a flip of mindset. It requires an acceptance of the basic Deming premise that 94% of the challenges lie in the system, and 6% are the result of the worker.
Upgrading an innovation system might well be the greatest legacy of a leader. Retired CEO of Procter & Gamble A. G. Lafley, in his book The Game-Changer, puts the new mindset toward innovation this way:
My job at Procter & Gamble is focused on integrating innovation into everything we do.
Every business has some central organizing principle that people use as the basis for making decisions, meeting challenges, and creating opportunities. For P&G, it is innovation.
Innovation must be the central driving force for any business that wants to grow and succeed in both the short and long terms. We live in a time when the rate of changes is such that today’s unique product or service becomes tomorrow’s commodity. Winning—playing the game better than your competitors and changing the game when necessary—requires finding a new way to sustain organic revenue and profit growth and consistently improve margins.
This means seeing innovation not as something left to the R&D department, but as the central foundation in the way you run your business, driving key decisions, be they choice of goals, strategy, organization structure, resource allocation, commitment to budgets, or development of leadership.
All too often, managers decide on a business strategy—what markets to pursue and what products to make—then turn to innovation to support it. This is the wrong way around. Innovation needs to be put at the center of the business in order to choose the right goals and business strategy and make how-to-win choices. It is the central job of every leader—business unit managers, functional leaders, and the CEO. The CEO, in fact, must also be the CIO—the chief innovation officer.
Innovation is the foundation for controlling your destiny. It was for P&G (in my experience) the real game-changer—the real source of sustainable competitive advantage and the most reliable engine of sustainable growth. Innovation is the answer.
What Did You Learn?
• Step back and THINK.
• What did you learn from this chapter?
• What confirmed what you already thought?
• What challenged your preexisting beliefs?
• As the world has changed, how have you changed?
• For your organization, is today the best of times or the worst of times?
• For your career, is today the best of times or the worst of times?
• Are you optimistic or pessimistic about your ability to face the new realities in the marketplace?
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SOLUTION:
Innovation Engineering Pedigree
We want sales and profits to GROW FOREVER. To do this, we need to innovate to meet changes in the market, with customers and competition. However, innovation requires CHANGE and entering the UNKNOWN. We HATE CHANGE and the UNKNOWN. We avoid it until we MUST DO IT. However, when we MUST do it—it might be too late. I wish there was a way to make innovation projects as reliable as cost-saving projects.
—Patricio Morales
Monterrey, Mexico
Definition of a System
The Innovation Engineering movement defines a system as Dr. Deming did: two or more independent parts with a common aim. In the case of an organization, this means two or more departments (parts) that work together toward a common organizational mission.
Sadly, the average organization realizes less than the sum of its parts—they realize less than what each department delivers independently. This is because, rather than optimizing their interaction with other departments for the good of the organization, each department’s primary focus is on delivering their departmental metrics, no matter the consequences to the organization as a whole.
Good organizations are the sum of their parts—they realize an additive impact from the interactions of their departments. There is cooperation and collaboration between departments. The management of each department reacts to issues rapidly. They readily sacrifice short-term department results for the accomplishment of the overall mission of the organization.
Great organizations are the product of their parts—they realize a multiplicative impact from the interactions of their departments. Employees anticipate customer needs and the needs of other departments. Good organizations innovate to problem-solve challenges when they arise. Great organizations anticipate issues and proactively innovate to take advantage of opportunities, lead market change, and prevent problems from developing.
To move from an average or good organization to a great organization requires the engagement of leadership. This is because only the leadership of a team, department, division, or organization has the bigger picture understanding of today and tomorrow.
Dr. Deming wrote of the need to replace management with leadership. To paraphrase Dr. Deming: The job of management is one of prediction. It’s about finding out what will help the customer in the future. It’s about finding how to get ahead of the customer.
Leadership is about leading a team, department, or organization into the future. It’s about making strategic choices on what products, services, and markets to invest resources in. It’s also about investing in capability building, such as employee education, tools, and systems to enable team members to work smarter.
In 1954 Peter Drucker wrote in his management classic The Practice of Management:
It is not enough for the business to provide just any economic goods and services; it must provide better and more economic ones. It is not necessary for a business to grow bigger; but it is necessary that it constantly grow better. . . . Every managerial unit of a business should have clear responsibility and definite goals for innovation. It should be responsible for its contribution to innovation in the company’s product or service; and it should in addition strike consciously and with direction toward advancement of the art in the particular area in which it is engaged: selling, accounting, quality control, or personal management.
More recently, Kouzes and Posner wrote in their leadership classic The Leadership Challenge:
Innovation and leadership are nearly synonymous. Leaders are innovators; innovators are leaders. The focus of a leader’s attention is less on the routine operations and much more on the untested and untried. Leaders are always asking, “What’s new? What’s next? What’s better?”
Full Stop
Predicting