Innovating your way to the top
With the global economic slowdown,
the need for innovation is even greater today. If you're looking to maintain
your market share, and perhaps post growth despite the recessionary
environment, innovation is key.
To understand why innovation is so
crucial to success, INSEAD and Roland Berger Strategy Consultants looked into
the innovative policies and practices at nine large multinationals widely
respected for their innovative skills: 3M, Research in Motion, Genentech,
Unilever, SAP, Bosch, Nokia, Infosys and Toyota.
The result is a new book called Innovating
at the Top: How global CEOs drive innovation for growth and profit,
whose purpose is to identify the values and methods the CEO finds most
compelling and useful to promote innovation.
Top-down
approach
While there is no silver bullet for
innovation, the book’s co-author Soumitra Dutta, the Roland
Berger Chaired Professor in Business and Technology, says the consensus among
the nine featured CEOs was that certain conditions do favour innovation and can
therefore increase the probability of success.
He adds that these CEOs view
innovation as part of the core portfolio of responsibilities, so they see
innovation in the company in a very broad sense, not just in a very narrow
technical product sense, and they see their roles as being the champions of
innovation in the entire organisation.
Olli-Pekka Kallasvuo, CEO and chairman of Nokia, however, advocates incremental
changes as innovation may be difficult to accept. He dismisses the notion of
‘if it ain’t broke, don’t fix it’ as sheer complacency; and instead recommends
“challenging and questioning” the current paradigm.
Even when the CEO has set the stage
for innovation, employees on all rungs must celebrate the newly-installed
innovation culture. Nokia’s success story can be linked to one of its four core
values: passion for innovation. Biotech giant Genentech credits its success to
never accepting the status quo, never accepting conventional thinking and
conventional wisdom.
Sharing
knowledge
As innovation begets innovation,
CEOs too believe in engaging more innovation partners by sharing knowledge.
“We have learned that sharing
knowledge is the best way to get knowledge,” says Henning Kagermann,
co-CEO of SAP. “If you feel you have to protect yourself, you have already lost
half of the game. The point is to be faster than the others through openness
and sharing.” Though SAP protects itself with a few large joint-development
partners such as Microsoft and IBM, 90 per cent of the time, it extends an open
door.
Similarly, Genentech publishes
discoveries and inventions at an early date, relying on the patent system for
necessary intellectual property (IP) protection. This open policy engenders
professional relationships with leading academic institutions which may
participate in joint research projects, thus helping to advance the biotech
field.
“In general, what you find is no one
company can do it alone,” says Dutta. “So you have to be able to collaborate
and compete with your peers. But a lot of the interesting innovation happens
when you work in close partnership with people in organisations who are your
suppliers or who are your customers and who can perhaps help you in getting
products to market faster.”
Embracing
diversity
Just as knowledge sharing is
important, so too is diversity, which promotes friction – the good kind – and
cross-fertilization. However, integrating personnel of different nationalities
can be a challenge, especially with companies which have employed a homogeneous
workforce. But Franz Fehrenbach, CEO of Bosch, who puts one of its core
values as cultural diversity, says you have to embrace cultural change. A sound
strategy, considering that the company’s future growth will be in emerging
markets.
Nokia’s Kallasvuo dislikes the term
“off-shoring”. “If you are a global company and you have operations everywhere,
the whole concept of off-shoring becomes irrelevant … There is no off-shoring,
you’re just present in different places.”
The
customer is king
One can go on innovating, but the
circle would not be complete without customer feedback. Fujio Cho,
chairman of Toyota Motor, observes that “innovation, based on the needs (of customers),
is faster, cheaper and a more dependable approach.”
Infosys sends key research lab
personnel to meet with customers, because “unless our researchers realise what
the outside world is and what is happening in the trenches, their innovations
will have no value for the customer.”
To take this even further, several
CEOs are immersed in the stimulating challenge of engaging R&D teams in
business model design. Once considered the preserve of senior management,
business modelling has entered the R&D arena, all this because
digitisation, the internet, and new markets and distribution channels offer a
sometimes bewildering array of business options to influence development paths.
However, correctly evaluating
R&D progress and roll-outs has important implications beyond any particular
initiative. If innovations are not properly measured and assessed, promising
R&D efforts could be prematurely aborted.
New
blood, new ideas
As new blood can also engender new
ideas, companies such as Infosys make a point of engaging young people in the
race to develop new software. The company’s chairman and chief mentor N.R.
Narayana Murthy says: “We have to encourage youth because youth is all
about new ideas … we have to create an environment where the young people are
very confident, they are very energetic and they are very enthusiastic to add
value to the corporation.”
Infosys reserves up to three days
for an “Innovation Day” where only people under 30 can present ideas and
suggestions to senior management.
Nevertheless, innovative ideas would
not come to fruition if not for the right processes. A significant consensus
among the CEOs suggests that processes can be designed to remove obstacles and
create favourable conditions.
Dutta says successful organisations
are trying to create what can be broadly termed as ‘innovation platforms’.
“These are not processes in the negative bureaucratic sense of the word
‘process’, but much more as supporting environments for enabling virtually
everyone in the organisation to come up with ideas and run with those.”
Jim Balsillie, co-CEO of Research In Motion, which created the Blackberry
smartphone, says: “I think the key thing I have learnt on innovation, is that
innovation lies much more in process than just having the right answers. So
there’s a real premium on visibility, in transparency, in collaboration, and I
think that goes a long way.”
Even if you have adopted all the key
innovation drivers mentioned above, the buck doesn’t stop there; employees need
to be continually motivated to keep the ideas flowing.
Genentech grants substantial stock
options, as well as other forms of enhanced compensation, to strong performers.
At SAP, individuals are compensated primarily by team performance, and senior
executives are rewarded by how well their teams contribute to overall company
results.
Several CEOs point out that a
powerful incentive is simply seeing customers use a product or a service.
Having success in the market, in turn, helps the innovation cycle.
Innovating at the Top: How global
CEOs drive innovation for growth and profit is published by Palgrave Macmillan.
http://knowledge.insead.edu/innovation/innovating-your-way-to-the-top-1713
No comments:
Post a Comment