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Innovation, Strategy

Consistent Innovation – Some New Thoughts

 Mar 052012

In Jim Collins’ book “Good-to-Great”, most of the companies he discussed are no longer around and/or not so great anymore.  Presumably, Collins wrote “Built to Last” to address this by trying to identify what makes companies last.  Although not specifically focused on innovation, one might think perhaps there are some pearls of wisdom to be found there; alas, one half of the companies mentioned in that book are no longer around.

So, could we say that more innovative companies last longer?  More related to innovation is Kim and Mauborgne’s book Blue Ocean Strategy.  There is a significant section of that book that deals with sustainable innovation.  To remind those who have read the book and to provide background for those who have not, this innovation strategy promotes the creation of uncontested market spaces, tries to make the competition irrelevant, promotes creation of new demand, advocates breaking the value-cost trade-off, and simultaneously targets differentiation and low cost.  The authors noticed that many companies that created a blue ocean failed to sustain their uniqueness and it took specific company strategy processes to enable them to continuously create new blue oceans.  Tools such as the six innovation principles (reconstruct market boundaries, focus on the big picture rather than the numbers, reach beyond existing demand, get the strategic sequence right, overcome key organizational hurdles, and build execution into strategy), the strategy canvas, and the 4 actions framework (eliminate, reduce, raise, and create) are presented in the book as examples of useful strategy processes to encourage companies to continually innovate new blue oceans. Perhaps it is like a capability maturity issue.  Some companies innovate as ”one hit wonders” (Osborne Computer?).  Some companies house innovative leaders that create blue oceans for them until they leave the company (Apple?).  Still others build innovation processes into the company culture and periodically create new blue oceans (Intel?).

In this posting, I will attempt to present an equation, of sorts, that attempts to quantify many (probably not all) of the parameters of companies that continually innovate in their industries and create blue oceans of new industries.

Innovation Success =

Leadership Awareness of Latent Market Desire x

Bandwidth of Leadership Communication to Developers x

Ability of Developers to Execute the Design Required x

Ability of Manufacturing/Processing to Make and Ship the Product x

Bandwidth of Marketing Efforts to Interest Potential Customers x

Ability of Support to Handle Field Questions/Problems x

Innovation/Change Cultural Encouragement (ICE) x

Timeliness of the Whole Process x

Good Luck

 

Leadership Awareness of Latent Market Desire, Bandwidth of Leadership Communication to Developers, and Ability of Developers to Execute the Design Required

To me, innovation is about determining the latent desires of the market, as opposed to the stated desire.  Companies that maintain a heightened sense of awareness of the latent market, effectively communicate this to the developers, and execute well, are what I would call innovative.  One-hit-wonders do not demonstrate all three of these traits simultaneously.  If a company executes well it can get by with a single leader providing the first two requirements, but ultimately the company is not innovative when that leader leaves.

Good strategy is based  on an analysis of both internal and external stimulus, or socioeconomic conditions.  A company that is adept at observing those conditions and passing the information onto the R&D and/or marketing functions within the corporation will stand a better chance at innovating the right things.

Innovation/Change Cultural Encouragement (I/CCE)

This is a complex variable that includes things like risk taking tolerance, urgency to innovate, prominence of dialogue, presence of transformational leadership , etc.  More often than not, stagnate organizational learning and change capacity hampers one or more of the other innovation parameters.

In Patrick Lencioni’s book “Silos, Politics, and Turf Wars”, he makes a strong case for establishing a short term sense of crisis to motivate people to work together instead of in competition with each other. You know the old adage: “necessity is the mother of invention”.  There is a lot of truth in that.  So, leadership that is good at rallying the developers toward a BHAG may be another core component of the ICE.  I believe a culture of organizational learning, as discussed in my post “Product Innovation as a Result of Organizational Learning ”is key to I/CCE.

When people discuss adaptability as an important component of I/CCE, they often mention this as the ability to “evolve”.  It may be helpful to consider evolution, survival of the fittest, etc. for a moment.  Recently, I have been studying the evolutionary theories of John Baptist Lemarke, who pre-dated Darwin by about 20 years, and recent cellular research by Dr. Bruce Lipton.  In fact, I think Darwin used (stole?) some aspects of Lemarkian theory.  However, Lemarke postulated that, rather than random mutations selected by a “survival of the fittest” algorithm, the cell biology is actually stimulated into mutation by chemical communication to the child during incubation.  Therefore, Lemarke said mutation to adapt better to the physical environment in which the baby would be born is the basis of evolution.  This resonates with recent findings that there are mechanisms within cells that actually squash most random mutations, and with recent findings that cells exhibit a spurt of mutations when exposed to alien environments.

I know this sounds like I am getting off topic, but actually, I think it is pertinent to identifying some aspects of productive I/CCE – the tendency to adapt to internal and external changes of environment. More later…..

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