Companies Need to Do More than Pay Lip Service to Innovation

Stephen DeAngelis

December 05, 2019

One oft-heard business mantra is: Innovate or die. The message may be stark and a bit hyperbolic; nevertheless, Paul R. La Monica (@LaMonicaBuzz) reports, “Innovative companies are trouncing the rest of the market.”[1] He explains, “Innovative companies are supposed to be better long-term investments than firms mired in complacency and stagnation — that’s obvious. But just how much better innovative companies perform may surprise you. Companies that invest heavily in research and development made more than a 25% return over the past year, nearly double that of the S&P 500 (SPX), according to an index compiled by a strategist at Nomura’s Instinet subsidiary. The group of companies also beat the 19% gain for the tech-heavy Nasdaq 100 (NDX) index.” At some level, most CEOs recognize it’s important to foster constant innovation. Nevertheless, they often hold back because innovating takes effort and resources. Thor Ernstsson (@ThorErnstsson), CEO of Alpha, explains, “Innovation doesn’t happen by chance. It happens with change. While the difference between chance and change may only be one letter, after two decades of founding tech companies and building digital products, I can tell you with absolute certainty that no one wants to change. And why would they? Change means hard work, risky decisions and potential failure. But without change, your innovation aspirations are just that: aspirations.”[2]

Resistance to change and innovation is not a new phenomenon. Centuries ago Niccolo Machiavelli, in his classic The Prince, wrote, “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.” Rosabeth Moss Kanter (@RosabethKanter), the Arbuckle Professor at Harvard Business School, reiterates, “Leaders say that they want more innovation. But then they trap themselves and their associates inside the structures that keep them stuck–inside the building, so to speak, where ideas get stale fast. That’s dangerous in a world of disruption and change.”[3] Peter Done (@Peter__Done), Group Managing Director and founder of Peninsula Group, concludes, “It’s not enough to say that a business is innovative, it has to be innovative.”[4]

The innovation imperative

“Let’s face it,” Done writes, “true innovation isn’t easy, which is why it’s rare. And it’s why most businesses tend to make incremental gains over the years rather than undergoing a complete reinvention. Execs know that it’s the far safer bet — for revenue, job security, profits … pretty much everything. But it’s not without risk. … To protect a well-established company from its very own Kodak Moment, it must embrace innovation.” Done’s comments beg the question: Must every innovation be disruptive? Entrepreneur and author Kashyap Vyas (@kashyapvyaas) doesn’t dismiss the importance of incremental change. He writes, “Innovation refers to the coming up with new and improved ways of doing things. It is the changing processes and/or the creation of more effective processes, ideas, and products. Therefore, being innovative does not just mean inventing something but also changing and adapting to the existing things to make them better and more effective for humanity.”

The late LSU Professor Leon C. Megginson, is attributed with stating, “It is not the strongest or the most intelligent who will survive but those who can best manage change.” I think he’s correct, which is why innovation is an imperative for most businesses. Vyas notes, “Businesses are increasingly embracing the concept of innovation in their day-to-day processes these days and for an excellent reason. There is a dire need for businesses to innovate if they wish to stay ahead of the competition and find success.” Done believes the secret to innovation is generating a constant stream of ideas. He writes, “Every business begins with an idea. But to be successful, there needs to be a continual series of good ideas.”

Overcoming inertia

Kanter agrees new ideas are the lifeblood of innovation. She also believes too many executives shutter themselves off from new ideas. She notes, “Nothing stifles innovation faster than thinking that you already know it all.” She asserts, “It’s time to let in some fresh air. C-suiters should try outside-the-building thinking. This mode gives leaders the essentials for innovation: broader perspectives, a chance to sniff trends, and a set of direct experiences that jar them into seeing new possibilities. … New possibilities can spring up anywhere, anytime, if leaders are listening.” Done agrees with Kanter. He writes, “Think about where you look for new ideas. Some business leaders and execs — not all — tend to train their entire focus on the boardroom.”

In some ways, Kanter and Done are suggesting business leaders emulate Prometheus, the Greek mythological Titan who is credited with the creation of humanity from clay, and who defies the gods by stealing fire and giving it to humanity as civilization. Metaphorically, Prometheus left his comfortable office, made an on-site visit to the gods, and brought back fire, which turned out to be a great innovation for advancing humankind. Academics at Stanford note, “The closest thing in the history of computing to a Prometheus myth is the late 1979 visit to Xerox PARC by a group of Apple engineers and executives led by Steve Jobs. According to early reports, it was on this visit that Jobs discovered the mouse, windows, icons, and other technologies that had been developed at PARC. These wonders had been locked away at PARC by a staff that didn’t understand the revolutionary potential of what they had created. Jobs, in contrast, was immediately converted to the religion of the graphical user interface, and ordered them copied by Apple, starting down the track that would eventually yield the Lisa and ‘insanely great’ Macintosh. The Apple engineers — that band of brothers, that bunch of pirates — stole the fire of the gods, and gave it to the people.” They conclude, “It’s a good story. Unfortunately, it’s also wrong in almost every way a story can be wrong. There are problems with chronology and timing. The testimony of a number of key figures at Apple suggests that the visit was not the revelation early accounts made it out to be. But the story also carries deeper assumptions about Apple, Xerox PARC, computer science in the late 1970s, and even the nature of invention and innovation that deserve to be examined and challenged.”[6] What is not incorrect about the Steve Jobs visit to Xerox PARC is that he did make the visit; which is what Kanter and Done are encouraging — get out of the office.

Concluding thoughts

Kanter concludes, “Outside-the-building is a metaphor for enlarging perspectives. Facing intractable problems that don’t fit neatly into industry categories can help new generations of leaders see opportunities for innovation. Several blue-chip firms deploy a corporate service corps of talented employees for community problem-solving in the U.S. and globally, learning the complexities that can’t be reduced to PowerPoints. Such encounters stretch minds and grow the collaboration skills that support both creativity and execution. Breaching the walls separating leaders from the wide world outside can prepare them to innovate before it’s too late.” Shuttering yourself or others away in offices and cubicles seldom produces new ideas or forces people to confront new challenges. Done insists, “When staff work in a diverse, collaborative and creative environment with the freedom to generate unconventional ideas, it fosters a culture of innovation.” Vyas agrees collaboration is essential to create an innovative environment. He writes, “Keep in mind that collaboration is key. The moment you think that you can do it all yourself, you will be setting yourself up for massive failure, no matter how talented and driven you are. So, choose wisely and innovate away!” Kanter is pushing for outside-the-building collaboration that provides the greatest exposure to new ideas and concepts. I think she’s correct. Merely paying lip service to innovation is a great way to talk yourself into the dustbin of history.

Footnotes
[1] Paul R. La Monica, “Innovative companies are trouncing the rest of the market,” CNN, 20 may 2019.
[2] Thor Ernstsson, “Everyone Wants To Innovate, But No One Wants To Change,” Forbes, 19 September 2019.
[3] Rosabeth Moss Kanter, “Companies Think They Want New Ideas. But They Don’t Act Like It.The Wall Street Journal, 1 November 2019.
[4] Peter Done, “The Power Of Ideas: Even Those That Don’t Work Out Actually Do,” Forbes, 15 October 2019.
[5] Kashyap Vyas, “Innovation and Its Importance within Business Organizations,” Interesting Engineering, 20 August 2019.
[6] “The Xerox PARC Visit,” Stanford University.