Why is innovation so damn hard?
Nearly three-quarters (73 percent) of American CEOs polled by PricewaterhouseCoopersbelieve their industries will be disrupted over the next five years as direct and indirect competition heats up. Innovation may be the only way for their companies to survive and thrive – but spearheading successful innovation is easier said than done.
If you define innovation as simply “thinking outside the box,” that’s your first problem. Instead, take a close look at the box you’re in.What is the box made of? Cardboard? Limestone? Mirrored glass? Imagine finding another box outside that box, and another outside the second, and so on… all composed of different materials and affected by different forces. At any point, one or more of these boxes might change fundamentally – perhaps be weathered and distressed by the elements, undergo a metamorphic transformation, or shatter into a million little pieces of bad luck. How will you and your innermost box respond to these changes? The answer, of course, is innovation.
As a leader, you need to be (hyper-)aware of your customer and industry, as well as willing to entertain seemingly crazy ideas. Google and LEGO have done particularly well in this regard. LEGO embraced the crowdsourcing movement by encouraging members of the public to submit their own designs on the Lego Ideas site, and also invested in ethnographic studies of how kids play before brainstorming new products based on its research. Meanwhile, Larry Page of Google advocated having “a healthy disregard for the impossible” in a 2005 commencement speech at his alma mater, the University of Michigan. This approach helped spawn everything from Google Street View to the ongoing self-driving car project.
Sounds simple, right? So why are truly innovative corporate cultures so few and far between?
“Evolution is happening whether your enterprise embraces it or not.”
1. The disruption factor
Companies that are too reliant on their current revenue-generators – I might even say “myopically focused” – often turn away from disruptive ideas, declaring them too risky. Clinging to your core business may seem like a good idea today, but what about tomorrow? Evolution is happening whether your enterprise embraces it or not. Don’t follow in the footsteps of these former titans – emphasis on “former” – by failing to see the forest for the trees.
- Blockbuster: Once a staple in every town, video stores are now practically obsolete. Blockbuster thought of itself as a video rental retailer rather than a leader in the content delivery business, and got clobbered by Netflix as a result.
- Eastman Kodak: This 127-year-old company was the creator and leader of the entire film and imaging industry, but perhaps should have viewed its primary mission as recording events, memories and ultimately history. Kodak was stuck on the medium (delivering an image via its film). This proved to be its downfall when digital technology rolled around. Then came the “Kodak moment” epiphany: An image can be captured digitally and delivered over any medium, including email and text message. It doesn”t need to be printed on glossy paper.
- Borders Group: From the moment e-commerce arrived on the scene, Borders was skeptical that it would ever take off. The company contracted its ecommerce to Amazon in the late 1990s and focused exclusively on its brick-and-mortar. Borders didn”t wake up to the fact that this new approach was more than a flash in the pan until it was too late – the one-time book-selling titan was already going under.
These are by no means the only examples. AT&T had the technology to make mobile phones years before the first of these devices stormed the market, but was afraid the technology would be a disruptive threat to its $22 billion long-line business. Moreover, the speed of disruption is gathering momentum – it took far longer for Netflix to edge out Blockbuster than for Airbnb to realize a larger market cap than Hilton, the largest hotel chain on the planet. How many other examples can you think of?
2. An over-emphasis on excellence
All companies want to deliver – as well they should. However, some organizations go overboard by glorifying excellence, vilifying mistakes and inadvertently torpedoing innovation in the process. It’s said that Thomas Edison conducted hundreds of unsuccessful experiments before inventing the light bulb. Would your company have given him the freedom to innovate without penalization or refused to allow leeway for mistakes?
3. A short-sighted viewpoint
Many leaders fall victim to short-term thinking – and you can hardly blame them, given the structure of compensation systems and the quarterly earnings cycle on Wall Street. That said, aspiring innovators need to take a much more long-term view, anticipating how their industries will change and develop in the years ahead, then taking action today to secure their corporate viability tomorrow.
4. An unchallenged status quo
The “If it ain”t broke, don’t fix it” mentality is a good rule of thumb for when you”re tinkering under the hood of your car, but not so much when you”re running a company. Boards are often too accepting of management’s strategy, even when the rationale behind an approach is nothing more than “We”ve always done it this way.” The only way to clamber out of this rut is to challenge the status quo and propose a more innovative alternative.
That isn”t to say traditional business models are necessarily bad, but do they take into account how customers and market conditions are changing? Do they facilitate a proactive response to advancing technology shifts or merely allow companies to react after the fact? A client of mine, the CEO of a publicly traded $5 billion old-line traditional business, once told me that although he was thrilled with his company’s success, he was most concerned about how the enterprise would look in five years. Rather than resting on his laurels, he sought to predict how his various distribution channels would want to interact with the business in the future. This mindset is exactly what is needed for a company to remain competitive.
Innovation must start from the top, but most leaders fall short in this regard. Make sure you”re not one of them by taking these pieces of advice into account.
- Constantly challenge corporate assumptions and seek out new perspectives. Don’t fall victim to myopia!
- Reward innovation, and resist the urge to write off ideas as too risky or impractical.
- You”re only as good (or as innovative) as your team.
- Cultivate diversity so your talent will bring a greater range of ideas and perspective to the table.
- Keep the Serenity Prayer close at hand: Focus on what can be changed and accept what can’t.
Only by keeping the above in mind do leaders have a fighting chance at transforming their companies into innovators.
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