Radical Innovation: Can It Still be Done?

Stephen DeAngelis

December 22, 2011

Jill Jusko, a Senior Editor at IndustryWeek, writes, “Global competition is in a take-no-prisoners mode. To compete, the U.S. manufacturing community is re-examining its innovation and product development processes to be better, faster and cheaper.” [“Smarter Product Development,” 17 August 2011] She continues:

“The manufacturing community is and has been painfully aware of the critical importance innovation and product development play in the competitiveness of their organizations. Survey results tell the tale, with nearly three-quarters of respondents to a Boston Consulting Group survey ranking innovation among their companies’ top three strategic priorities. A far smaller percentage has been satisfied with the payoff of their efforts.”

Jusko published her article just before Apple’s Steve Job resigned as CEO and shortly before he finally succumbed to cancer. Following his resignation (and especially following his passing), Jobs was universally recognized as an innovator who changed industries. Andrew Hill openly wonders if changes in the ways that companies are approaching innovation and management are making it less likely that the type of innovations that characterized Jobs’ career will occur in the future. [“Is radical innovation a thing of the past?Financial Times, 27 September 2011] Before continuing that line of inquiry, let’s continue with Jusko’s article. She continues:

“The growing focus on innovation and product development as keys to competitiveness raises a number of questions: What is the manufacturing community — not only manufacturers but all the players who contribute to the health of this sector — doing to be more successful in their innovation and product development efforts, and what should they be doing? … If you want to grow your company in any significant way, innovation is a required element. That’s Eaton Corp.’s perspective. The Cleveland-based power management manufacturer aims for 12% to 14% growth every year ‘and the lion’s share of that has to come from organic growth,’ says Michael Wynblatt, Eaton vice president for engineering technology. Organic growth typically requires grabbing a larger share of an existing market or entering entirely new markets or segments. These options require purchasers to either give up a competitor’s product or possibly buy from a company with which they are not familiar. ‘Why is someone going to start buying Eaton, maybe for the first time ever? Probably only if the product is very distinctive, and has high differentiation from what the competitors have,’ Wynblatt says. ‘Innovation is the way that you get there.’ Those highly differentiated products also deliver higher margins, he notes.”

Attracting customers away from competitors to increase market share is good for a company (if difficult to do), but it is not necessarily good for the economy. Creating “entirely new markets or segments” is much better for the economy, but it normally involves radical innovation — the type of innovation that Hill suspects we are going to see less of in the future. Jusko continues:

“Wynblatt helps drive Eaton’s innovation efforts. He is responsible for Eaton’s Innovation Center. The center is spread across six locations globally, four of which are in the United States and one each in India and China. … The upfront work is extremely important, Wynblatt emphasizes, given the expense of product development. ‘To make that kind of investment, you want to make sure that the product is going to work and that customers are going to want to buy it,’ he says.”

If a product isn’t bought, it isn’t an innovation. For something to be called an innovation, it has to be new, it has to have value, and it must be realized (i.e., succeed in the marketplace). Jusko continues:

“Wynblatt … notes that a key component to the current model is the ‘innovation champion.’ That project leader is responsible not only for overseeing the technology, but also it is his job to overcome all of the barriers that any new innovation faces, whether it be a technical, business case or organizational barrier. ‘I think that is what makes this model successful,’ compared with models that distribute the job functions among multiple individuals, Wynblatt says.”

I suspect that Wynblatt is correct. Of course, in order to overcome the types of barriers mentioned by Wynblatt, an innovation champion must have a great deal of autonomy and authority. Those were key factors in Steve Jobs’ ability to innovate. Jusko continues:

“While globalization has presented manufacturers with new challenges in innovation and product development, it has presented new opportunities for innovation as well. … Wynblatt provided the example of a hydraulic technology that has the potential to produce significant fuel savings, depending on how a vehicle employing the technology is used. In its investigation, Eaton discovered that a particular vehicle was used very differently in China than in the United States, changing the business case for the product.”

One of interesting things about true innovations is that end-users often imagine ways of using the technology that developers never dreamed of. Microsoft’s recent advertising campaign about its Kinect system provides an excellent example of what I mean. Jusko quotes Kaigham Gabriel, deputy director of DARPA, who said something profound, “The reality is that innovation happens when you try to make something.” I believe that. Jusko continues:

“Gabriel suggests that the power of speed in innovation cannot be underestimated. For DARPA that translates to ‘increasing the number and diversity of people who can contribute, who can make, who can design, who can realize their designs, and increasing the speed at which those cycles of innovation and design happen,’ he says.”

Most creativity consultants agree with Gabriel that involving a number of people from diverse backgrounds normally improves both the quantity and quality of ideas considered. He makes an interesting point about it also speeding up the innovation process. Jusko continues:

“Joachim Ebert, a partner with management consulting firm A.T. Kearney, believes many U.S. companies struggle with product development due to their struggle with the ‘gated’ product development process that many employ. Gated processes are characterized by the concepts of stages or phases. The number of stages can vary and incorporates processes such as concept exploration, business analysis and ultimately a ramp-up to production. Between each stage are the toll gates, which provide management with an opportunity to review the output of the prior stage or phase and decide whether to proceed. Ebert said that companies’ struggles with the gated process have led to additional bureaucracy and documentation requirements.”

There is a bit of Catch 22 here. The reason that gated processes were initiated in the first place was to ensure that a doomed project didn’t continue to bleed a company of resources. Killing projects is more difficult than one might imagine. For more on that subject, read my post entitled Killing Ideas as Part of the Innovation Process. It appears that it is the gates not the tolls to which Ebert objects. You still need some process that can kill bad ideas before they drain the coffers. Jusko continues:

“Ebert … says it is time to consider moving from the ‘fairly rigid, gated process’ with its somewhat one-size-fits-all approach to a flexible process that not only affects product development but also the product development organization. … Ebert says a more beneficial approach would be to focus more strongly on problem prevention through effective knowledge management. … ‘Don’t misunderstand me, I’m not saying get rid of all the discipline that is being brought about by a gated development process,’ Ebert says. Just recognize the amount of nonvalued-added bureaucracy it may be adding unnecessarily to the product development process.”

Just as Wynblatt touts the virtues of an innovation champion, Isabelle Royer believes that organizations “need to recognize the role of ‘exit champions’: [individuals] with the temperament and credibility to question the prevailing belief, demand hard data on the viability of the project, and, if necessary, forcefully make the case that it should be killed.” [“Why Bad Projects are So Hard to Kill,” Harvard Business Review, February 2003] An exit champion could be just what Ebert is looking for in streamlining the gate process.

As noted above, Andrew Hill is concerned that radical innovation is dead. He writes, “It is hard to identify radical innovations from the past decade and [it is] tempting to think great breakthroughs are no longer possible.” He does admit that that “plenty of thinkers would beg to differ.” One of those thinks is Professor Gary Hamel, a well-known management thought leader. Hamel told Hill that “the pace of change is putting pressure on organisations to make more radical changes.” Hill continues:

“[Hamel believes] new tools allow companies to exploit collective wisdom in unprecedented ways, and younger workers – the ‘digital natives – are impatient with old hierarchies and value systems. ‘I would be willing to stake my reputation that we will see more dramatic change in the way management is organised in the next 10 years than we’ve seen in the last 60 or 70,’ he told me last week.”

Hill, on the other hand, believes that new technologies are more likely to produce incremental change rather than radical innovation. He concludes:

“While I’d be happy to be proved wrong, I think the technology fuelling these small-scale improvements makes a ‘eureka’ moment less likely. As in product innovation, the fact that managers can identify, share and match advances, favours rapid evolution, rather than revolution, with best practice continuously revised and improved. Progress, yes: but more by leapfrog than by giant leap.”

So who’s right? Were I to place a bet, I’d go with Wynblatt’s hybrid model that has a powerful innovation champion leading a diverse innovation team. That approach is much closer to the way that Jobs actually made his breakthroughs at Apple. Right after Jobs resigned, Steve Lohr, the New York Times‘ technology columnist, wrote, “Let’s look at Mr. Jobs as a role model. Above all, he is an innovator.” [“Reaping the Rewards 0f Risk-Taking,” 27 August 2011] He continued:

“Mr. Jobs’s career can be viewed as a consistent pursuit of improving those odds, both for himself and the companies he has led.Mr. Jobs, of course, has enjoyed singular success. But innovation, broadly defined, is the crucial ingredient in all economic progress — higher growth for nations, more competitive products for companies, and more prosperous careers for individuals. And Mr. Jobs, experts say, personifies what works in the innovation game. ‘We can look at and learn from Steve Jobs what the essence of American innovation is,’ says John Kao, an innovation consultant to corporations and governments.”

I’m much more optimistic about the future of innovation than Andrew Hill. I don’t believe that radical innovation is dead. I’m not sure that Hill believes it is dead either.