By Mark P. Dangelo
Innovation is often characterized as an ideal or a grand scheme created by intellectuals who lack an appreciation for bottom line results. Many believe that innovation is created in a lab, but that it demands “real business men to make it profitable, not scientists.” It was even said to me this month that innovation was “too sexy of an ideal in times of operational survival.”
It appears that the dialogues on innovation frequently resemble highbrow dinner conversation, and have very little to do with “block and tackling” needed for business profits. In general, innovation is apparently about grand principles, but little bottom line profits or sustainable customer influence.
So, let’s divide this debate up into two camps – those that believe innovation is apparently too sexy and another that subscribes to continuous organizational innovation (COI).
Idealistic Innovation
Eggheads, academics, scientists, and researchers are just a few names levied at groups and individuals who arrive at new industry and functional “paradigm shifts.” The ideals and new operating principles encased within technology envelops are rolled out to the media and conferences as a new Tour de Force.
We’ve even witnessed this with industry standards groups, the addition of SOA, SaaS, Web 2.x/3.x solutions, and of course, risk management and securitizations. All excellent ideals, but lead times that ranged from 3 to 10 years and in some cases still seeking a profitable business model within given niche markets.
In many cases introduced innovation was very disruptive not only to the infrastructural methods, but also chaotic when dealing functionally with consumers, enterprise data integration, privacy, aggregation, retention implementation and the list goes on. Again, esoteric discussions that for many executives fail to resonate into profits. In times of growth and profit some have said, “If the lack of adopting these innovations are hurting my bottom line now, why should I invest in them later when I have even less money?”
Therefore, without concrete examples, definitive payback schedules, and process and operational integration plans, innovative ideals have very little efficacy within the organizations – especially today. The result of grandiose ideals is a lack of appreciation for continuous improvement using innovation to bolster operating, competitive, and profit positions.
Idealistic innovation creates superior innovative discussions, but little actionable advice or roadmaps – poorly introduced, improperly framed, and no recognized expert (s) to ensure success. Stated simply, the ideals are too intellectual for comprehension resulting in sponsors “outdistancing” the rest of the organization. Everyone fails in these scenarios – even me.
COI — Relevant Innovation
Relevant innovation is not a second tier solution to a tier one problem or challenge. At the tip of its spearhead is the realization that innovation is not sustainable unless it is designed into the culture and operations of the existing organization before it is deployed.
It can also be iterative and more than likely continuous to positively adjust to actual results, market fluctuations, and consumer sentiments. In the last decade, it has been implicitly discussed in books and papers by authors Tapscott, Kurzweil, and Hunter.
COI, continuous organizational innovation, is not a onetime event, nor is it associated with a singular program or initiative slogan. Using strong analytics and inference-driven premises, COI is weaved into a creative-destructive sequence of operational actions that promote innovation viability, while driving up productivity and profits.
Avoiding the “sexy” and superfluous nature of innovative adoption, COI progressive operations ensure that the introduction of change is more about valuations, efficiencies, and consumers rather than the innovation itself. The innovation and its premises are merely steps or catalysts to a greater pragmatic result. For example, the large push surrounding “e” is less significant than many technologists evangelize.
The bottom line importance includes (but are not limited to) the reengineering of business models, the efficiencies gained, the forward and reverse supply chains, and the removal of huge swaths of waste built into the organizations. The “e” principles will radically change as the markets change and the world financial systems reach a new equilibrium. Whereas, the underlying or layered innovation it is very valuable, it is not THE innovation that compels action, adoption, sustainability or longer-term adaptability (i.e., the on-going cycle of true innovation) within the executive ranks.
A COI Quiz
Attribute and Response / Answer
1. Do your organizational leaders or team primarily consider innovation to be:
a) Sexy
b) Cost Saving / Avoidance
c) Competitive / Market Distinction
d) Revenue Generation / Profitable
2. Does your organization have a budget for innovation?
a) No
b) Yes
3. How would you characterize your organization?
a) Laggard
b) Mainstream Adopter
c) Early Adopter
d) Pioneer or Trailblazer
4. Does your organization have a dedicated position specifically responsible and accountable for innovation (i.e., not the CIO / CTO)?
a) No
b) Yes
5. How would you describe your organizational culture?
a) Dysfunctional
b) Informal
c) Hierarchical
d) Matrixed
e) Blended
6. How is innovation primarily introduced into your organization?
a) No clue
b) Media Articles
c) Vendors
d) Outsourcers
e) Consultants / Researchers
f) Individual Employees
g) Internal Committee
7. How is innovation fostered and / or rewarded within your organization?
a) It Is Not
b) Sporadic / Depends
c) Established Processes
d) Part of Organizational Values
The list could be greatly expanded, and it will be in subsequent COI research results starting in 2009. Suffice it to say, the more items selected farther down in the abbreviated answer list, the better COI organization you will be or hopefully have become. And yes, using a series of analytics and correlations, valuations can be assessed resulting in profit and efficiency opportunities.
* * * * * * * * * *
Even with the aforementioned brief threads started on both sides of the debate, we will continue to watch the consumer, business, and credit markets worsen as a severe recession corrects the “innovative” follies of the past. However, the data clearly points to a fundamental divergence between the implementation of COI metrics and the beliefs that innovation is achieved by periodic and violent inventive seizures.
It is this latter organizational “fits and starts” culture approach that, believe it or not, created or materially contributed to many of the problems we are unwinding today. And no, lowering of credit standards and deployment of high-risk products is not real innovation. Standards are not singularly innovation, nor are products that fail to incorporate process, compliance, risks, productivity, or more importantly a healthy consumer.
Perhaps innovation from a macro level is too sexy, too exotic, and too amorphous. If assumed to be part of a “big-bang” approach, they are more akin to large, physical programs with high costs and even higher failure rates. So yes, given these parameters and internal beliefs, innovation is often too sexy and too risky of a behavioral pattern to unleash within a for-profit organization. It is especially too sexy for many corporate officers steeped in traditional views. One can simply go back to the proven management classics from Deming, Drucker, Peters, or Champy, if you have lingering doubts.
However, as implied, irresponsibility is not innovation. COI is not about arcane discussions. If we look out to tomorrow, next week, next month and hopefully next year, we will see that innovation is NOT sexy – it is a pragmatic necessity for a new COI competitive world.
Perhaps if COI was part of the cultures within the FSI, mortgage, automotive, and insurance industries, we might have avoided the need for bailouts created by iconic dogma, risk and greed?