Innovation has been acknowledged as one of the key drivers of success in organisations
Words by: Rajesh Nair Featured image source: EY
It is now official – Innovation has been acknowledged as one of the key drivers of success in organisations. We respected the word by putting it on a pedestal reserved only for ‘strategy’ in the past. Entrepreneurs swear by this word and credit innovation for the impressive acceleration they have achieved with literally no favourable economic tailwind in the past five years. Even when the successful entrepreneurs of today politely attribute a bulk of their success to ‘luck and good fortune’, we refuse to buy it. As a management observer for two decades now, I have never been convinced that success is always because of being at the right place and right time. True, companies do run into fair weather. But more often than not, it is also their ability to use innovative ideas of their teams and the exceptional capability and speed with which they implement these ideas that help them bask in the glory. If one separates the wheat from the chaff, one of the emerging themes is – there are companies which have benefitted from a corporate culture of that encourages fearless value addition to their products and constantly challenging the utilities of the current portfolio of products. In a phrase – it is about inculcating a culture of innovation in the organisation.
The continuous quest for innovation also helps in leveraging a seemingly abstract concept like serendipity. The English lexicon defines serendipity as ‘an aptitude for making desirable discoveries by accident’. Newton postulating gravity after an apple fell on his head is a great example of serendipity.
What is interesting is the array of successful products which have come from failed experiments. Coca-Cola, one of the world’s most popular brands, was originally invented as an alternative to morphine addiction, and to help treat headaches and relieve anxiety. Coke’s inventor, John Pemberton, a veteran of the Civil War who himself suffered from a morphine addiction — first invented a sweet, alcoholic drink infused with coca leaves for an extra kick. He called it Pemberton’s French Wine Coca. It would be another two decades before that recipe was honed, sweetened, carbonated and, eventually, marketed into what it is today: the most popular soda in the world. The other example is Brandy. Brandy, the caramel-colored after dinner drink, started off as a byproduct of transporting wine. About 900 years ago, merchants would essentially boil the water off of large quantities of wine in order to make it easier to transport it as well as save on customs taxes, which were levied by volume. After a while, a few of these merchants, bored perhaps, after a long day on the road, dipped into their inventory and discovered that the concentrated, or distilled, wine actually tasted really good. Voila! Brandy was born – a product which consumer product analysts say is consumed more by Malayalis than the rest of India put together!
The myth which can never be a rule is that – youth is a guarantee of innovation or young companies are the true innovation hubs. This cannot be rebuked instantaneously nor can we ignore the contributions coming from larger companies. When we talk of products which came out of the typical innovative organisations, we are reminded of large organisations like 3M, Sony or Pfizer.
Take 3M’s Post-it Note, for example. Back in the 1970s, 3M scientists Spencer Silver and Arthur Fry were toying around with possible uses for an adhesive that Silver had discovered. The invention eventually resulted in the groundbreaking product that 3M launched in 1980 and which has since become an office and household staple. Or take the Sony PlayStation, launched in 1994. Originally a pass time project for Sony Sound Engineer Ken Kutaragi — one that nearly got him fired — the gaming system eventually received the blessing of then-CEO Norio Ohga and became the best-selling game console of all time.Viagra, or Sildenafil, as it’s officially known, was originally conceived as a treatment for hypertension, angina, and other symptoms of heart disease. But initial clinical trials revealed that while the drug wasn’t great at treating what it was supposed to treat, male test subjects were experiencing a rather unexpected side effect: erections. A few years later, in 1998, the drug took U.S. markets by storm as a treatment for penile dysfunction and became an overnight success. It now rakes in an estimated $1.9 billion dollars a year.
An important point to note is that – the winners are not just the inventors. These are interesting outputs of collective discussions of innovative employees who were encouraged by a company culture which helped them see these disproportionately large dividends. This is an important concept.In the face of vigorous competition from all corners of the globe, now is the time to focus on renewed innovation — to kick into high gear the entrepreneurial fervour that got your organization to where it is today. And the best way to do that is to draw on resources you already have: your own employees.
The following are some interesting practices I have seen in organisations that have embarked on this quest.
You need a formal structure for breeding innovation. You have to give people enough time away from their “day jobs” to work on creative ideas. The processes need to not only focus on the ideation but set systems to make sure that these ideas are tried out and they go somewhere.
A formal group or panel needs to be tasked with specifically looking for creative ideas that might lead to a competitive advantage, projects where some preliminary experimental work has already been completed, and projects for which resources required from both within and outside.
You need to assemble a diverse workforce. Diversity is not just fashionable or corporate social responsibility hyperbole. It improves performance. Diversity can improve an organization’s performance by enhancing creativity or team problem-solving. Organisational behaviour scientists keep harping on the fact that “stirring the pot” while also adding the right ingredient, we can improve innovation by quantum. Diversity also encourages the intellectual debate and conflict that lead to innovation.
You need to ask your employees for ideas. It is important to tap the knowledge base of your own employees. This can be done using traditional techniques, such as ratings and feedback on R&D projects or a physical/ virtual suggestion box. Or it can take a radically different approach, such as creating an “idea exchange” or “market for innovation.” Idea exchange is a meeting of the ideators and the concerned idea implementors/ sponsors. The latter is a technique for evaluating the quality of ideas and predicting which are most likely to work and therefore deserve backing.
You need to design a career path for your innovators. After all, it is important not only to make room for innovators in your organization but also vital to provide incentives for them to stay, including a well-defined career path. They need to have the technical and marketing infrastructure of a large company at their disposal. You need to also encourage experimentation and foster a culture of tolerating mistakes but creating a learning system to avoid similar mistakes. You need to also give them challenges and mix it up. A lot of these innovators, by their own admission, are ‘unemployable’. It is not in the sense that companies don’t want them, but that companies cannot contain them.
Rajesh Nair heads EY in Kerala and is also the President of TiE Kerala. With more than two decades of experience in advising and managing assignments across organizations to his credit, Rajesh loves to share his insights and can be found writing on all aspects of management with a special interest in entrepreneurship, startups and e-governance.
You need to encourage employees to build on each other’s ideas. Every idea need not be radically different in wavelength. There is immense value in building on each other’s ideas. Often the originator of the idea tends to think in a particular pattern and easily overlooks the broader picture. A synergistic team helps in fleshing out the idea and thinking through risks and other practical impediments. Traditional metrics still don’t encourage and reward this important trait. Constant celebration of the innovating team and not the innovators helps foster this aspect.
You need to have a learning plan. This is useful for the earliest, most difficult and ambiguous stages of experimentation. By explicitly recognizing those innovators proceed on the basis of assumptions rather than facts, this approach can save projects from being rejected during the review stage. It’s also helpful to use activity-based metrics that are linked to innovation rather than outcomes because they reflect the inherently experimental nature of the process. For instance, a company committed to radical innovation might develop metrics that assess whether the enterprise is extending its networks and getting into new arenas. Innovators should be encouraged to document their learnings for posterity to benefit from.
Don’t be discouraged because there really isn’t anything totally new out there in your industry. Many entrepreneurial successes have happened because someone found new uses for an old product, like the earlier examples, and chanced upon a discovery or ventured into new industries or geographies. It’s hard to always keep thinking about the Next Big Idea, especially if your company is already the industry leader, but it’s a definite way to rekindle the entrepreneurial spirit. Remember, that’s what propelled your company to the top, and it’s what’s going to keep it there. And believe that the ‘happy accident’ is just around the corner!
