This action might not be possible to undo. Are you sure you want to continue?
- it’s what differentiates the great from good The other day I came across two pieces of information that set me thinking. It is generally recognised that one of the key factors that differentiates the consistently successful companies from the less successful is their creativity - their good ideas - that they turn into successful new products and process innovations. During the workshops that I run we look at the results of the research carried out by Treacy & Wiersema into the Discipline of Market Leaders* and their conclusions that to become a market leader (and, in terms of results, these are the companies that are the most successful) you need to be a market leader in one of three disciplines and at least industry average in the other two. The disciplines are: Operational Excellence Product and Process Innovation Customer Intimacy I've now run 100’s of workshops for groups of SME CEOs, Corporate Boards, Senior Managers, Trustees of not-for-profit organisations and others - all over the world. I always ask delegates to share with us what they believe is the current "shape" of their business, in terms of the three disciplines, and what shape they would want to target for the future. Consistently I find that of the three disciplines the one that is most often found wanting is Product and Process Innovation. Indeed it is not unusual for CEOs to say to me: "There really is no innovation in our type of business" I have two comments to that, firstly that if that's the case then surely it's a massive opportunity to differentiate yourselves from the rest and secondly I simply don't believe it!
A good friend of mine, who had previously worked in large corporates and as CEO of SMEs, has recently made a career change and joined one of the largest international headhunters. He was telling me that he has been blown away by the quality and creativity of their, IT based, information systems and business processes - an order of magnitude better than anything he had ever seen before. Clearly this organisation has decided that as part of their strategy one of their differentiators from the competition will be through Process Innovation. - and this, of course, is in a sector where it would be very easy to say: "There really is no innovation in our type of business" How many times have I had partners in “professional” firms like legal practices, surveyors, architects or accounting firms say this to me when the reality is that they have significant opportunities to develop innovative systems and processes that will not only make them more efficient and effective but significantly differentiate them from the competition. Unfortunately the problem in this type of business – where generally they charge on a time basis - so often is, I find, that everyone from the top to the bottom is driven solely by a paranoia with maximising their charged time rather than the leadership taking time out to “get in the helicopter” and plan creative, and effective, business strategies to generate sustained profitable growth. But it’s not just these businesses that find difficulty in successfully innovating – whether it’s ideas for new products or new processes. The question that every business needs to ask itself is what systems, structures or procedures they have in place to enable ideas to come out, be properly considered and then effectively implemented. These ideas need to relate to every area of your business - not just the development of your products and services - but also every aspect of your business and the way it functions. You must develop a climate where all employees are encouraged to challenge all the paradigms in the business - there must be no sacred cows - and their ideas for change properly considered. -and this is where the first item I read comes to mind: “According to an article in Strategy + Business magazine, Toyota¹s employee suggestion scheme generates around 2,000,000 ideas every year of which wait for it around 85% are implemented”. I find these figures simply staggering. Do you even come close?
Recent research based upon interviews with 765 CEOs and business leaders gives this breakdown of the most significant sources of innovative ideas: Employees Business Partners Customers Consultants Competitors Associations etc Internal R&D Academia 40% 36% 35% 22% 20% 18% 15% 12% Source: IBM "The Global CEO Study 2006" You need to find a way to harvest all the ideas of every one of the members of your company, partners, customers and others. This applies to EVERY company and organisation – NO EXCEPTIONS! Coming up with the ideas, however, is only the beginning. Whether these ideas relate to key technology or product development, revisions to existing practices or procedures or even more fundamental ideas, it is still a massive step to turn those ideas into an innovative and successful new product or service or a successful revision to business procedures. The problem is, perhaps, that ideas come from right brain thinking whereas the implementation of ideas is essentially left brain. Every successful business has to enable both. This is where the second item I read is relevant: “A study by Booz Allen Hamilton has found that there is no correlation whatsoever between the amount spent on R&D and company success however you measure it.” I'm not surprised by these results. I've seen too many companies who don't handle product development and technology development in a structured manner. Us British, for example, were famous in the past for coming up with new products developed from exciting technical innovations but not based on proper consideration of the market's needs or aspirations. Concorde is a prime example. So having set up effective mechanisms that give the space, permission and encouragement to generate ideas you then need to have disciplines in place to evaluate and implement the best of them.
These must follow the mantra of: Think – Plan – Do not Ready – Aim – Fire Much more time must be spent on ‘Think’ than any of the others – with your hands tied behind your back! You need to be absolutely clear about the customers’ (be they external or internal) needs. You must think through the business case for doing what you are thinking of doing, you need to be hard nosed about the cost of development and even more hard nosed about the technical and commercial specification that has to be met by the innovation. Only when all that thinking has been completed and signed off do you then get into planning the entire project – every aspect of the project. Finally you can then get into ‘Do’ and if you have put sufficient time into the first two this will be the fastest of the three to complete. This may not feel like the most natural way to operate – we like to ‘try out things’ – start changing things or designing ‘on the hoof’ and experimenting, but it is not the way to maximise the chances of success (in a business sense) nor of minimising the cost of development. So there we are, in summary • • • • Every business has the opportunity to innovate Every business needs to innovate in order to be successful You need to find a way to get the ideas out from everyone You need to be highly disciplined in order to evaluate and implement those ideas successfully.
* The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market’ by Michael Treacy, Fred Wiersema. Published by Perseus Books; ASIN: 0201406489
© 2007 Roger Harrop
Roger Harrop is a former plc CEO, international speaker, author, business adviser and consultant. He is an expert on sustainable profitable business growth. Get your free e-book "Everything you wanted to know about profitable growth but didn't know whom to ask" at http://www.rogerharrop.com
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.