PoS Sep 2016 | What spurs innovation in organisations?
You may recall I conducted a workshop titled Insight, Intuition, and Innovation in Bangalore and Mumbai in July this year. At the centre of the workshop was the question – What spurs innovation in organisations? Two glaring misconceptions emerged from the discussion.
Some felt it is creative people. They offered the example of advertising agencies. You have to recruit and retain creative types to produce work that helps sell clients’ products. Others pointed out it was leaders like Steve Jobs who carry the firm on their broad creative shoulders. If only a company could nurture and build a leader like Jobs, the organisation would prosper on the back of a series of breakthrough products.
Creative people theory
It is true that naturally creative people can and do contribute to a firm’s output. However, if it is a special talent that only a few have, not every organisation can avail their services. Does it mean less fortunate firms are handicapped forever?
The fallacy of the creative people argument lies in the fact that everyone is and can be innovative. They need appropriate resources, training, experience, and above all a conducive environment.
Indian Space Research Organisation (ISRO) is not known for hiring specially gifted people. Yet it has blazed a remarkable trail. The Mars Orbiter mission was accomplished on the very first attempt at a fraction of the cost US and Russia incurred. No other country had succeeded in the first try. Ordinary people have driven innovation in companies like Asian Paints, Starbucks, Sigma Aldrich over decades and contributed to their leadership.
Humble leadership and innovation culture
The argument against finding an innovation engine like Steve Jobs is even more compelling. We know how he, seemingly single handed, drove Apple’s remarkable innovations. But we scarcely know the names of CEOs of companies like 3M, Procter & Gamble (P&G), and Toyota. They may not have been larger-than-life but their firms have sustained innovation for many years.
Their secret lies in culture – their unique patterns of behaviour and ways of creative problem solving. Curiously, they seem to share the belief that encouraging curiosity and gaining insight is important for innovation to take root and blossom.
Practices at the root
Toyota has a well established practice – genchi genbutsu. It means Go See. Engineers and managers are expected to find out the root cause of a problem by observing the process, the machine, or customer behaviour wherever the problem is occurring. Toyota’s famous car the Lexus LS 400 was designed and built after extended and deep study of target customers’ aspirations, lifestyle and behaviour.
P&G’s Living It program, practised since 2002, requires managers and product developers to live in the homes of consumers for several days at a time. They observe how customers shop, eat, do laundry and dishes, and manage their homes and families. They come to appreciate what housewives and families take pride in and difficulties they face in doing household chores.
The program directly led to P&G developing Downy Single Rinse, laundry detergent and softener. The product cut the six-step washing cycle to three and sharply reduced water consumption. Women in low income households in Mexico loved it.
Toyota and Procter & Gamble, to name just two, encourage gaining and proliferating insight – the source of creative ideas – by immersive observation. Their practices and programs encourage a pattern of behaviour and build a culture that spurs innovation. Both, and many like them, lay great store by seeding and embedding an innovative culture.
The impact of innovation culture in P&G has been dramatic. Success rate of new brands more than tripled and R&D spend fell from 4.5% to 2.8% of sales in the first decade of the new millennium. The Toyota organisation implements one million, yes One Million new ideas every year. 30% of 3M’s revenue comes from new products introduced in the previous four years. The reason they have sustained innovation is their emphasis on culture, not focus on creative people.