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Innovation is a Banquet! –So Why Are So Many Leaders Starving to Death?!

I’m actually taking great liberties with the classic quote, “Life is a banquet, but most poor suckers are starving to death!" from Patrick Dennis’s book and Broadway hit, “Auntie Mame.”

My point being that although there are countless ways to engage our creative problem-solving brains to innovate day in and out, I am not optimistic that the majority of Americans in the business, non-profit, or governmental sectors will access this cornucopia before a lot more damage is done to our economy, environment, quality of life, and future potential.

For many, the word “innovation” is just a buzzword. They fail to understand that innovation is a state of mind and an approach, not a commodity that one can just order up, like a pizza, or flip on with a switch. Thinking that one can just make a few minor adjustments within one’s organization to become innovative is like having an argument on the cell phone while driving 90 miles an hour to get to a retreat center, and expecting serenity or enlightenment to be waiting at the door upon one’s arrival – It just doesn't happen that way.

And this is why it is projected that by the year 2020, only one out of five S&P 500 companies will still exist (findings of a comprehensive study published in Creative Destruction by R. Foster and S. Kaplan). The majority of companies simply will not have adapted to the changing world, and will therefore make themselves vulnerable to being taken over, sold off, broken up, or bankrupted.

I’m currently listening to the audiobook, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back, co-authored by international journalist Thomas Friedman (author of the blockbuster The World is Flat) and American foreign policy professor Michael Mandelbaum. Like the authors, I consider myself to be a “realistic optimist.” By which we mean that it is only by clearly taking in the “bad news” — the looming threats facing our companies, institutions, and economy — that we have any chance to do what is necessary to adapt our mindsets and correct our course.

Like Friedman and Mandelbaum, I too, still believe in “Yankee Ingenuity” and that we have the collective capacity to rise to the occasion and deal with great challenges, just as Americans did in The Great Depression, World War II, and the race to the moon. But we can’t even begin until we pull our heads out of the sand.

When it comes to business, I am enough of a capitalist to believe in the survival of the fittest. On one hand, I believe that companies led by short-sighted, arrogant leaders and managers should fail. It’s best for them to get out of the way to make room for other ventures led by those who are wiser, more humble, and better attuned to both the world around them and to the intelligence and talents within their ranks.

The tragedy won't be the auctioning off of the brick and mortar and mastheads of these companies themselves over the next decade. Rather, it will be the human costs resulting from the bad choices made by those leaders: the millions of talented people who will lose their jobs and livelihoods, as well as the loss of tax revenues that will further cripple our society.

And then “four out of five” of these US companies will fail?! – Even if it were half that (e.g. 51% of CEO's in the 2010 IBM CEO study expressed concerns regarding their companies' futures for lack of creative thinking abilities) — what part of economic catastrophe do we still not understand?! Neither manufacturing jobs or increasingly outsourced pink and white collar services will be returning from our lower-cost overseas competitors in any significant numbers. That leaves American creativity and inventiveness to carry our economy forward. Yet we allow Brazil, India, and China to far outspend us in innovation (Boston Consulting Group Report, 2010) as the previously unchallenged lead we held in patent application filings now steadily shrinks. http://economix.blogs.nytimes.com/2010/10/06/china-poised-to-lead-world-in-patent-filings/ & http://www.wipo.int/pressroom/en/articles/2012/article_0001.html

Even among those in management who are talking about innovation, many don’t seem to grasp the irrefutable causal relationship between management style and innovative culture. I don’t believe that most American managers or the consulting professionals upon whom many of them rely, understand this fundamental reality: sustained innovation cannot exist in hierarchical, siloed, watch-your-back organizations.

“Management innovations” are necessary in order for other forms of innovation to see the light of day. It has been stated in numerous ways throughout these blog-posts that an organizational culture that fosters an innovative mindset and which produces winning results requires authentic mutual trust and respect throughout the organization. As the stand-out CEOs in the IBM 2010 Global CEO survey (“Capitalizing on Complexity”) indicated, trust and innovation are the means and ends and involve:

Cross-departmental and external stakeholder collaboration
Efficient and open communication in which mistakes are valued as educational opportunities rather than something to be covered up or blamed on someone else
Comfort with ambiguity, experimentation, and trial by error
Encouragement to question the status quo for the sake of continuous improvement
Processes and reward systems for fully engaging employees in contributing ideas for continuous improvements and increasing problem-solving autonomy throughout the ranks.

All of these necessitate a collaborative, versus a command-and-control style of management. Evidence abounds that the most successful U.S. companies (like Southwest Airlines, Google, and Apple) flatten their organizations and, far more than average companies, value and foster both the creativity and critical analysis of “whole brain” thinking at all levels.

Yet evidence and logic do not persuade many in leadership whose perceptions continue to be clouded by barriers of their own making. I am not optimistic that most organizational leaders in the U.S. are willing to trust and develop their employees’ abilities enough to relinquish control, because, as is said in Twelve-Step programs, their pain isn’t deep enough yet. –If only their poor choices wouldn’t inflict so much pain on the rest of us.

However… despite my concerns expressed above, as a dedicated realistic optimist, I will continue to focus my attention not on those who stubbornly fail to grasp the paradigm shifts that are necessary, but rather on the great innovators in all walks of life working with their creative muses and collaborating all over the world. I will feed my spirit and mind by exploring and learning along with those equally excited by the possibilities and the array at the banquet table!

Bon appetite!

Mangia!

The next post will further explore management innovation with a review of Gary Hammel’s great Harvard Business School article, “The Why, What, and How of Management Innovation.”

As discussed in previous posts, it is commonly held that there is creative genius in each of us. But, along with our innate curiosity (creativity’s inextricable partner) most of us found our creativity repressed by the tender age of thirteen by the pressure to “fit in,” not be seen as “weird,” [i] not ask too many questions, and as we got older, to go by “The Rules,” and do as we’re told if we want to succeed. I wholeheartedly agree with Langdon Morris of InnovationLabs who wrote that “It may only take only the right mix of context, curiosity, support, and environment for it come abundantly forth.” [ii]

And so, smart managers understand that good ideas come from everywhere in organizations. “Hence, the average Toyota worker, including those on the assembly lines, is said to contribute on average more than one hundred ideas each year.” Despite some of its recent troubles (and current tragedies in its homeland), Toyota is universally recognized as the most efficient auto manufacturer on the planet.[iii]

Gathering and Channeling the Collective Genius:

Referring back to the top layer of the cake as described in “Let Them Eat Cake!” a couple of posts ago, below are some suggestions I have found for creating an entrepreneurial environment throughout the organization, as recommended by the innovation leaders surveyed in the 2010 IBM CEO report. [iv]

Create and Communicate a Shared Vision of What Innovation Looks Like in Your Organization:

    Use cross-departmental input to create a shared language and lexicon. (Jorge Barba) [v]
    Go beyond the mission and vision to make innovation the responsibility of each and every employee (“50 Ways…”) [vi]
    Involve as many people as you can at the beginning to get upfront buy-in. (“50 Ways…)

Co-create A Vision for Innovation with Everyone in Your Organization:

Help employees to present their ideas and make their cases:

Establish an Entrepreneurial Environment: Ideas come from everywhere. Give every “intrepreneur’s” idea an objective hearing. Provide management support in building the business case* in presenting the idea. (“10 Crucial Elements…,” Jim Miller) [vii]

* I discussed this point in my 2/12/11 post on "A Shared Failure to Communicate".

Ask employees what gets in the way of their ability to offer contribute creative solutions and innovation, and work to remove those blocks.

Create Efficient Systems for Collecting Ideas:

Create formal opportunities for offering ideas: Intranet repositories using an idea
management software, internal conferences, etc. (“10 Crucial Elements of Building an Innovative Company,” Jim Miller & “”50 Ideas…, “)

Embrace the Numbers Game:

“…Harness everyone’s creativity by involving them in the ideation process; generate lots of ideas, for only a few winners will result, and then broadening your view of innovation to not just technological, products, or services, but also innovate the business model.” (Jorge Barba)
Have a number of ideas in the works. Short and long-term, incremental, and discontinuous.
“The main difference between companies who succeed at innovation and those who don’t isn’t their rate of success – it’s the fact that successful companies have a LOT of ideas, pilots, and product innovations in the pipeline.” (“50 Ways…”)

Create Efficient Systems for Low-Cost, Rapid Prototyping:

“Fail often to succeed sooner.” Tom Kelley, GM IDEO.
Prototype using videos and models or other quick and cheap methods early on to visualize which projects to further develop and which to discard. (“Get Creative,” Bloomberg Businessweek [viii] and “50 Ways…”)

Support Cross-departmental Collaboration:

Reroute reporting lines and create physical spaces for collaboration. …collaboration requires more than lip-service to breaking down silos… team up people from across the org chart.
‘You have to…get down into the plumbing of the organization and align the nervous system of the company.” (J. Andrew, BCG) [ix]
Provide “Skunkwork” spaces with visual tools like white boards everywhere, even on ceilings and floors. (“50 Ways…”)
- Encourage informal, cross-functional networking and exchange of ideas through shared space, social activities, etc. (“10 Crucial Elements…,” Jim Miller)

A nd … Let Go!

“Innovation requires no fixed rules or templates – only guiding principles. Creating a more innovative culture is an organic and creative act… Don’t make your innovation processes so rigid that they get in the way of informal and spontaneous innovation efforts.” (“50 Ways…”)

I’ve only scratched the surface here regarding employee partnership in innovation. Please, share your ideas, experiences, and success stories!

[i] Get Weird! 101 Innovative Ways to Make Your Company a Great Place to Work, John Putzier. AMACOM, 2001.

[ii] Langdon Morris, “Creating the Innovative Culture: Geniuses, Champions, & Leaders,” InnovationLabs. (2007).

[iii] “The World’s Most Innovative Companies,” Bloomberg Business Week. (April 24, 2007).

[iv] IBM Global CEO Report from 2010: Capitalizing on Complexity

[v] Jorge Barba, http://www.game-changer.net/

[vi] “50 Ways to Foster a Culture of Innovation,” The Heart of Innovation. Idea Champions

[vii] Jim Miller, “Ten Crucial Elements of Building an Innovative Company”

[viii] “Get Creative,” Bloomberg Businessweek

[ix] Boston Consulting Group, “Innovation 2010: A Return to Prominence and the Emergence of a New World Order”

While doing research for a training program I delivered last week on structures and processes needed for organizations to shift their cultures so they become conducive to creative thinking and innovation, I came across a sobering 2010 report compiled by the Boston Consulting Group (BCG). Although 51% of the global leaders polled in the IBM CEO study said they didn't believe their organizations were prepared to succeed in the increasingly complex global environment (second blog post), this BCG report summarized below makes the IBM study look like a Hollywood romance by comparison.

As I wrote in the launch of this blog, my interest in and commitment to this topic comes from a deeply-held conviction that our imminent economic future as a nation depends on U.S. organizations getting on board the innovation train, quickly. Certainly for me, the BCG study strongly reinforces that perspective. In addition to the business case, when it comes to our myriad environmental and social problems, as Albert Einstein said, "We can't solve problems by using the same kind of thinking we used when we created them."
(The report is cited by permission of The Boston Consulting Group. Click on the link below to see the full report.)

"Innovation 2010: A Return to Prominence–And the Emergence of a New World Order":

Working in partnership with BusinessWeek and its Market Advisory Board, The Boston Consulting Group (BCG) conducted a survey for the seventh year in a row, gathering input data from 1,590 executives from around the world representing a range of markets and industries.

This most recent 2010 report postulates that as a result of the U.S. and other mature economies' general lack of commitment to and investment in innovation, "a new world order in innovation is taking hold, one in which rapidly developing economies (RDEs), led by China, India, and Brazil, will increasingly assume more prominent positions, while the United States and other mature economies continue to play major roles but gradually become less dominant." (p4)

Apple and Google were ranked by international executive respondents as the two most innovative companies, with Apple once again as the hands-down winner (a rank it has held in this survey since 2005). Yet, more than half of those who participated in this survey expect that U.S. will lose its standing as the leader in innovation within the next five years.

These predictions are similar to the warning flags waved by Thomas L. Friedman in his book, The World is Flat. Among the precipitous trends, Friedman points to:

America having recently slipped from 1^st to 4^th place in the number of patent applications.
The increasing dearth of math and science students training in U.S. universities just as our nation’s top scientists prepare to retire.
Tightened U.S. immigration policies that have caused a significant drop in foreign math and students attending American universities and who now have considerable job opportunities in others countries that are investing more heavily in innovation.
- And funding cuts to the National Institutes of Science.

If these trends remain, then it only goes to follow that American business will lose even more of their global market shares with our nation losing considerable economic strength.

Implications for Leaders:
BGC attributes the low level of U.S. investment in innovation to companies “hedging their bets about the economy” with incremental improvements versus “moving aggressively to discover, invent, and capitalize on new growth areas.” The report ends by offering the following recommendations to business managers in the established economies who have yet to “fully come to grips with” the consequences of not making innovation strategic priorities.

1. Becoming better at innovation is probably the single most important thing that you can do this year. (p20)

Why? Although you survived the Great Recession – so did your competitors. Like you, they too largely "mastered the cost, productivity, and operational excellence playbook." However, many of them, upon realizing they had survived, saw innovation as a top strategic priority and started investing heavily in it around the middle of 2009. If you are not one of those companies – you are about a year behind (when this report came out, mid 2010).

2. If you don’t get better at innovation, your boss (or board) will eventually either stop spending money on it – or find someone who can improve things.

“Part of the issue may be that most companies can’t even define what they really mean by innovation, let alone measure it. And while there is no right or wrong definition, you do need a definition that everyone agrees on and that aligns with your company’s strategy.” – Get a clear, shared definition. (p21)

3. Top management is really going to have to get its head in the game this year.

“In every highly innovative company we know, the CEO truly has innovation near the very center of his or her radar screen. Indeed, the difference between a company whose CEO and leadership team have an “all in” mentality regarding innovation and one whose leadership supports innovation merely at an abstract level is unmistakable – and so is it’s impact on culture and results.

If you think your company can win at innovation without your being truly committed, you are wrong and will be increasingly exposed. Too many companies are being led by fully committed and engaged leadership teams that have linked innovation to the company’s business strategy, put in place the needed measurement systems, and are investing to see the results.” (p21)

4. Your company cannot afford to cut back on its innovation investments in the BIC countries and other RDEs.

If you thought competition was tough in the past, just wait. …As can be seen from our list of the most innovative companies, the “BIC*-plus” world has arrived on the innovation front and is quickly moving into the mainstream. *(BIC stands for Brazil, India, and China.)

‘To deal with this new reality, you need to increase your investments in these countries, not decrease them. …Lower your investments in these countries at your own risk.” (p21)

The report concludes:
“Keeping pace, let alone flourishing in this environment will demand a two-pronged attack. Your company needs to be actively innovating both in and for the slower-growth, mature economies, which remain very large and profitable. Simultaneously, you need to be ever more focused – no matter how focused you think you already are – on the much faster-growing developing economies, especially China, India, and Brazil, with their promise of large markets and newly innovative competitors. Striking the right balance here will obviously be highly challenging. But the potential competitive rewards of hitting the mark are vast – as is the downside of coming up short. Indeed, skillful leadership in innovation has never been at such a premium.” (p21)

Dramatic natural disaster photos aside, I hope I've won over a few more believers that we need to rally and inspire others and send wake-up calls around our organizations that the time is upon us to do whatever is needed to engage the other half of our brains.

Check out Kowabunga! Riding the Wave of Organizational Creativity & Innovation!

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Innovation is a Banquet! –So Why Are So Many Leaders Starving to Death?!