Is innovation one of the top values or priorities in your organisation? If not, perhaps it should be – how else is your organisation going to survive?
Innovation comes in many shapes and sizes from big and radical to small and incremental. It is not just about inventing new products but increasingly about service innovation, process innovation, business model innovation and social innovation.
In these straitened times organisations have become expert at cutting costs and improving efficiency. But what about their innovation performance?
Research by McKinsey and Booz & Company shows that little has changed in organisations' perception of and satisfaction with innovation performance. Which begs the question: where are all the visible improvements?
Let us think a little about what the 'default' mode of organisations is. If a crisis hits, profits fall and a competitor gains market share, what is the company's first reaction? It is usually to reduce costs and improve efficiency to get the company into shape.
But getting a company into shape requires not only attention to detail, a focus on numbers, eliminating ambiguities and uncertainties, cutting out any slack and reducing anything that might be superfluous – but also innovation and risk going forward.
Once the immediate crisis is averted, what happens when someone at the firm comes up with a crazy new idea: to create something that they do not (yet) know how to create, what its potential market size is or when return on investment will be. What happens when they want resources for experimentation and development?
If the innovator's boss is someone whose personal preference and comfort zone is for incremental changes, details and certainties, they are unlikely to grant that wish.
Those who are excited by and thrive on operational excellence have quite different personal preferences, values, skills and comfort zones to those who are excited by and thrive on innovation.
As London Business School professors Costas Markides and Paul Geroski say in one of their articles: "The skills, mindsets and competencies needed for discovery and innovation are not only different from those needed for mass market optimisation, they conflict …"
But both skillsets are necessary for an organisation's long term survival, so what are these differences and why are they in conflict?
An operational excellence mindset is well suited for cost cutting and improving efficiencies, focusing on numbers and details, eliminating risk and ambiguity, as well as analysis and evidence. Contrast that with a mindset thriving on innovation, where there is a preference for visual language and the big picture, being comfortable with risk and ambiguity, as well as trusting intuition and dreams.
What is important, appreciated, and considered to be relevant by one grouping is the opposite of what is important, appreciated and considered to be relevant by the other. And of course, they are not likely to like each other.
Interestingly though, improvements in costs and efficiency are often achieved through incremental innovation, and innovation can lead to significant efficiencies and improvements in cost structures. The fact of the matter is, innovation needs more than creativity, and operational excellence needs more than attention to detail.
Because what is important to them is so different, people of different mindsets often have prejudices against one another, which can make collaboration and communication rather difficult.
So how do you work around this? Leaders who check the following attributes in staff and themselves should do quite well with both operational excellence and innovation excellence.
• Awareness – what is the context in which I operate? What is it that I am trying to achieve? Who are the different people I need to make it happen, and what are their personal and individual preferences?
• Appropriateness – given what I would like to achieve, what are the most appropriate tools, processes, people, skills, and measuring criteria?
• Appreciation – given that I need everyone, with all their different skills and preferences, what can I do to encourage trust, respect and appreciation of diversity, and of each individual's contribution to the overall company's success?
• Alignment – how can I ensure that different aspects of my organisation are there to support both operational and innovation excellence? In order to answer this question you may have to move away from an approach that treats people like numbers; you need to understand them as individuals, with individually different preferences and choices.
• Attitude – the last thing is mainly about you, as a leader. How much do you lead by example, perhaps setting you personal preferences aside and supporting operational excellence equally to innovation excellence? How much do you nurture learning, openness, flexibility and collaboration with those 'who are not like us' over fear of failure, the 'one right way' and competition?
Dr Bettina von Stamm is director and catalyst at the Innovation Leadership Forum