The fight of our lives: innovation leadership

“America is NOT the greatest country in the world anymore…We are 7^th in literacy, 27^th in math, 22^nd in science, 49^th in life expectancy, 178^th in infant mortality, 3^rd in median household income, 4^th in labor force and 4^th in exports. We sure used to be. We stood up for what was right…We fought for moral reasons…We built great big things…We reached for the stars…We aspired to intelligence. We didn’t belittle it. It didn’t make us feel inferior…We didn’t scare so easy.” Excerpt from “Newsroom” (R-rated language).

 There has been a lot of talk, in the last ten or twenty years, about innovation. And yet, it seems to take forever. Think:

• –  Manufacturing (the North American auto industry had to face almost certain death before innovating)
• –  Healthcare (only a sliver of health records are electronically stored)
• –  Newspaper publishing
• –  Big box retail (Radio Shack, Circuit City, Best Buy, J.C. Penney)
• –  And look ahead to pharma (with patents expiring, it remains to be seen whether big pharma can re-invent its business models)

Yes, there are extenuating circumstances that we could discuss all day, but the results would still be the same.

Some might argue that this context is the natural evolution of new products, of stars maturing into cash cows and declining into dogs (as described by the BCG Growth-Share Matrix). However, entire industries—even communities and economies—have been built around these products and product lines.

Now, clearly, I am no macro economist. I am just a career business professional looking at a declining economic landscape in disgust. We can do better. We must do better.

We need real innovation. It is time to re-invent ourselves.

Economic systems do not favor risk

If we connect the dots, from a layperson’s point of view, the systems we have built are against us. They are not built for adaptability―they are built for stability:

• The only fiduciary incentive for an organization to undertake innovation is ROI
• We are living through a climate of high risk
• Leadership is taking a conservative approach to risk
• Risk threatens the certainty of ROI
• Leadership is taking a conservative approach to innovation

The conservative stance for organizations through the recession has been to preserve cash. By mid-2008, except for projects with huge sunk investments, most innovation was frozen.

Since then, only organizations facing dire industry or competitive threats have re-started or initiated major change.

Even though we are, by best estimates, sputtering out of the recession, the current economic climate still does not favor aggressive innovation. Leaders like a clear horizon. The personal and organization risk for supporting discretionary investments in such uncertain times is significant. The potential for ROI is still precarious.

Some may find such statements draconian and will point to more moderate initiatives in their organizations. Yes, some strategy is underway. Sadly, much of it is focused on cost savings. This is not to suggest that cost saving is bad, only that it is not enough.

Finessing our organizations to death

“Operational excellence” might be the most well-intentioned business tragedy of our time.

While millions of dollars are being spent on driving cost efficiency to the bottom line, the top line is getting smaller and smaller.

Seems to me it’s a bit like trying to cross the street in Europe: we are looking right, but the traffic is coming fast, from the left.

Self-preservation: expediency vs the full cost

Now, I am not completely naïve. I get it―within the larger context of our organizations we also have to look after ourselves. We have to survive today in order to fight another day.

This might be the toughest balancing act of all. Lobbying for change and executing strategy inside of organizations today is one of the highest risk career endeavors anyone takes on. Fail, and you are history (and sometimes, even when you succeed). But what is the alternative?

Recently, Clayton Christensen, renowned for his work on innovation (particularly The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997) was interviewed by Strategy+Business [1]:

“When you make a decision based on expediency—because you think you can get away with paying only a smaller, marginal cost—you always pay the full cost in the end. This goes on in your personal life just as much as it does when you invest in setting up a sales force. One example I give in the book is parents who do their kids’ homework for them. They are helping their kids get ahead in the short run, which is expedient. But one of the most important roles of a parent is to create small challenges, to really take a hand in their children’s development and set them up for bigger challenges. Doing their homework for them undermines that and leads to greater costs in the long run.”

Hope

Great leaders, and there are some out there, are looking for people willing to invest personally with them in making important change happen.

We have to find each other.

The formula for long-term viability (for organizations, for communities, and for economies)

No doubt it is overly simplistic, but it seems to me that leaders could use a simple rule of thumb, a simple ratio that looks at “mid-term : long-term investment.”

Perhaps it could be “operational efficiency : innovation.” Economists and accountants seem to like formulas and nifty acid tests. What if an organization decided that our OE : I ratio for the next five years should be 3 : 1. If that translated neatly into expenditure it would put aside 25% of spend for innovation. Sounds perfectly legitimate to me.

Anecdotal information from my network suggests, though, that investment in innovation is still far less than pre-recession and, far more importantly I believe, we should ask ourselves, “Is it enough?”

Enough for what?

• How long do you want to have your job? How is your bonus affected? How is your potential for promotion affected?
• How long do you want your organization to prosper?
• How long do you want your community to thrive?
• How long do you want our economies to be vibrant?

Is the strategy we are currently pursuing enough to secure these objectives?

Most of us really don’t think this way. We wake up on Monday and think, “What do I need to do to get to Friday?” or “How can I get my next raise?” There is little incentive to think further ahead than this.

Leaders, however, are compelled to think in 3-5-10-year cycles and are required to at least think about the organization’s prospects for prosperity over this time frame, or at least for as long as they intend to be with this organization.

What if we thought in larger terms? The reality is that we are all citizens of a larger context. The notion that we can optimize a single job for a period of time without compromising the larger context is a lie we have been telling ourselves a long time.

Real leaders step up to this challenge and bring their organizations with them.

Save your strategy, save…

We could extend this thinking to: save your job, save your community, save your economy.

Every day, all across North America, great organizations are sliding further into mediocrity.

We are all a part of it until and unless we take a stand.

Good intentions are wildly insufficient. You will have to find ways to stand your ground, and survive.

Are you part of the problem or part of the solution?

What can you do?

• Share this sentiment with leaders, with colleagues, in the lunch room, on your intranet.
• Be a champion for change. Be courageous and outspoken, supportive and patient. Be determined and resourceful.
• Find allies. Build your network. Feed your network. Shift your culture.
• Rally for innovation.
• Breathe the spirit of optimism, entrepreneurialism, and resilience into every conversation.
• Be tenacious.

This is not for the faint of heart―many will resist and some will turn on you―but it is for the greater good.

References

[1] “The Discipline of Managing Disruption”, Art Kleiner, Strategy+Business, March 11, 2013.

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• Breakthrough innovation is “simplicity on the far side of complexity” (Post 1)
• Breakthrough innovation is uncomfortable-get through it. (Post 2)
• Breakthroughs in strategy
• Honk if you love innovation. Quotes and resources on innovation

Change Whisperer by www.gailseverini.com is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.