The word innovation continues to be used indiscriminitely by people in the business community who rarely, if ever, have been given the tools and/or the freedom to be innovative. Why is that? Most companies do not have the internal fitness to manage the stress true innovation puts on an organization. Let us explain.
Our editor wrote an essay on innovation comparing it to the once popular train-wreck of a show Extreme Makeover (we're sure you can find the reruns somewhere). We think it is quite good. Have a read. Where Ouellette refers to tech companies just plug in municipalities to get the right context.
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There is something disturbingly irresistible about the series Extreme Makeover. Watching someone intent on changing their life by changing their skin is, well, like watching an accident in slow motion. The outcome is often going to be bad but we become all-too-willing witnesses to the spectacle before us.
Extreme Makeover is an unlikely place to look for useful insights into corporate innovation. Even the fat, awkward, and, let’s face it, hideous bubble-era companies were not going to improve their questionable bottom lines with a nose job, liposuction, and tummy-tuck. In spite of that, the show can offer some useful lessons when trying to understand the dynamics of innovation. Why do we need new lessons? Technology companies that died in the market crash left a legacy that still bloats the collective corporate body of today’s R&D driven enterprises.
During the media-stoked bubble years, innovation became a superficial skin that as often as not hid an unhealthy company. Back then, every time we left our computers long enough to read a newspaper or watch television there was another company reportedly on the cutting-edge of innovation. Products became innovative solutions to consumer needs. Managers aspired to benefit from innovative compensation packages. Software engineers assumed the mantle of innovative code warriors. “Our company is innovative” rivaled “I use Botox” as the quintessential California mantra. When money is pouring in the door no matter what you do, it is easy to entrench bad business practices, especially around a concept so amorphous as innovation.
The press was complicit in the obesity. It started labeling as innovative any product or service that appeared novel, unique, or too obscure to understand. In fact, the more fantastic and wild-assed an idea was, the more likely it was to be fed ink. A reporter can’t decipher what some twenty-one year old just showed him, well, it must be so innovative that even Tim Berners-Lee would be breathless. Innovation stretched, dyed, and spun itself into the Emperor’s new robes. When the tech bubble burst we learned that true innovation, like beauty, is more than skin deep and is much harder to attain—it takes hard work, rigorous planning, and a robust support network.
How can Extreme Makeover help us pump up our flaccid corporate innovation skills? A recent two-part Extreme Makeover episode added a positive twist to the usual plot trajectory. Normally, candidates first go under the knife and then do two months of recovery and workouts to get their bodies fit. In this episode however, they had to lose weight and get fit before being cut and stitched into the external image that best resembled their internal aspirations. No quick-fix liposuctions and breast enhancements for this crew, their sweat equity earned them the right to surgery. The “no pain no gain” alternative seemed by far the better approach to the makeover process. Post bubble knowledge-based companies can learn from their example. But they will need help.
Consultants are to innovation what surgeons are to beauty. Both perform best when the patient already has good bones and is in robust health. When the client is already 90 percent complete and only needs just a few nips and tucks to bring out their existing beauty, it’s easy to be a creative genius. That is why many innovation managers can pull out their “cut first and get fit later” scalpel, slice, stitch, and leave a good-looking reference behind. In most real world cases though, effective innovation practices are not easily prescribed, especially when used on a corporate body that is innovation anorexic.
What are the “weird” anti-lessons, if I can borrow from innovation theorist Robert Sutton, we can learn from Extreme Innovation Makeover and apply to your company with or without innovation consultants? First, understand that lessons are not rules. Rules are prescriptive. They assume a complete understanding of the organism and every input and reaction that affects it. R&D based companies defy this kind of Fordian thinking. In fact, the practice of innovation is more like a process of obliquity. You get to where you want to go by, in effect, walking away from your destination. Here are the lessons.
Innovation Extreme Makeover Lessons
EM Lesson #1: Fitness precedes beauty.
Healthy bodies are more receptive to beautification than are unhealthy ones.
(Innovation evolves from sound business practices, good leadership, talented staff, and strong interpersonal relationships—get fit first then aspire to create innovative products.)
EM Lesson #2: Beauty is a subjective measure.
Some people think Ivana Trump is beautiful. Ford thought the Edsel was a beautiful car. What is beautiful to one person can sometimes be ugly to another.
(Innovation to one company is chaos to another—effective innovation practices are organization and environment specific. Be sure that your new innovation look fits your company’s personality.)
EM Lesson #3: Aspiring to beauty can be fatal, be prepared.
As the recent plastic surgery related death of Cinar Entertainment co-founder Micheline Charest illustrates, even the rich and powerful are, after all, only mortal.
(Be careful what you wish for, the wrong kind of innovation can destabilize and even kill your company. Ask Enron.)
EM Lesson #4: Fitness Precedes Beautification
Truly innovative companies are usually fit. They have good cash flow, effective business practices, and a strong management team. Many of the founders of these companies have a corporate vision that is more sublime than the MBA mantra of increasing shareholder value. Exceptional shareholder returns are often a by-product of their unique vision. Look at Apple, IDEO or Wal-Mart. These companies grew up on big ideas — and those ideas tended to be personal. People, not processes, can imagine new kinds of products and services and move towards them.
This lesson is scalable and is applicable to the macro-economic environment as well as the micro. Dr. Jennifer Montana of Advanced Research Technologies in Cambridge, conveys a general truth about her business. Dr. Montana advises macro-economic entities like Canada (that big, friendly country north of the U.S.) and cities like Philadelphia on how to foster innovative entrepreneurial clusters. Jennifer’s job is quantification based—rigorously so. However, she maintains that strong leadership on a personal level is critical. Dr. Montana is not talking about top-down leadership but collaborative leadership that overcomes parochial barriers and links innovation stakeholders. Why is that important? Innovation is a social process, she explains. Knowledge and information, so critical to the process of innovation, flow in the human context of strong social relationships and networks.
On a smaller scale, successful innovative firms tend to better utilize their company’s intellectual capital than do their competitors. Leveraging people and their ideas is a key success factor to them. How do they move ideas from one person to another in a way that benefits everyone? Some use brainstorming sessions. One method generates storyboards that look more like Architect’s drawings than they do business documents. Harvard Business Review’s case study on Florida Power and Light illustrates how effective this technique can be. (Problem solving this way was first seen in the charrettes made popular by Architects. Architecture as a practice has many parallels to innovative processes because, as some say, it is the world’s second oldest profession and has had a long time to get the strategies right). Why does it work? Ideas become visible so everyone can first understand and then improve them.
Another way of exchanging and improving ideas in a company is by using new information management and story-telling tools including the soon to be ubiquitous Weblogs or “Blogs.”. Of the many powerful blogging tools like Movable Type and Word Press, it is the visual planning and web publishing tool, “Tinderbox,” from Eastgate Systems Inc., that offers innovation driven companies a unique new way to both manipulate and manage ideas visually. Described as a personal content management assistant, Tinderbox’s early history was as a visual outlining tool for writers. Its interface is a working example of the “Boxes and Arrows” paradigm.
Who is using Tinderbox? Doug Miller the CTO of iRobot says, “This is the tool I feel I’ve been waiting fifteen years for.” Doug writes on his weblog:
“Last night as I was reading I came to one of my favorite passages, a section where one of the characters is interacting with her computer system, reading mail and scanning news items her filters and clipping services have culled out of the fire hose of information that’s constantly directed at her by the ‘net’ of 2039. Brin’s descriptions of the technologies she uses are wonderful. We’re seeing the beginnings of some of what he describes in today’s syndication, content aggregation and weblogging tools. It strikes me as I’m reading that the agents I’ve set up in Tinderbox are essentially the same thing that Brin is describing in this passage . . .”
Tools like Tinderbox and Movable Type can become the cornerstones of healthy innovation skills in entrepreneurial firms. Do you want to create a fit, innovative company? Hire good people, treat them well, create a culture of leaders, and give them tools to generate and share great ideas.
EM Lesson Number # Two: Beauty is a subjective measure
Innovation to one company looks like chaos to another and can be the litmus test of your organization’s emotional fitness. Innovation practices that work for Disney might not work for Pixar.
Michael Volker, Director of the British Columbia Advanced Systems Institute and a successful entrepreneur in his own right, tells of an innovation paradox that is both rewarding and punishing young companies in the region. These companies have the potential to become long-term success stories. In fact, as Mike tells it, they might become economic engines if they are nourished and allowed to grow. Yet, because they are successfully innovative they become early stage acquisition targets for larger foreign firms. That is good for the founders in the short term but tends to undermine the long-term growth of the region’s economic cluster. Imagine what might have happened to Microsoft, the City of Redmond, and the growth of the I.T. industry in general if IBM had purchased the fledgling company back in the seventies. On a macro scale, the consolidation of innovative firms under one overarching business entity is unlikely to perpetuate the kind of innovation “biodiversity” we enjoy today. Really big things tend to crush small ones. There are, however, examples where big companies give birth to smaller ones.
Toronto’s Designaxiom produces software to power the ubiquitous Flash interface. Some say that Designaxiom’s solution, Live Axiom 2.0, is a worthy alternative to Macromedia’s new Flash back end, Flex. Tom George, the company’s founder and chief developer, is ex-Microsoft Redmond. How did he use the process of innovation to launch the new product? Three years ago Tom had an insight into the way the Flash interface could be the front end of a dynamic new kind of Application Platform. Inspired, he sat down, designed Live Axiom, and then built a small company around the product. Tom’s approach to innovation would not work everywhere. He is the kind of software designer for whom the beauty of the code is as critical to the process of innovation as is the ultimate product solution. In this way he is like the inventor, Buckminster Fuller, who said, “When I’m working on a problem, I never think about beauty. I think only how to solve the problem. But when I have finished, if the solution is not beautiful, I know it is wrong.” Designaxiom’s innovation ability reflects the innate personality of its founder. The personal vision approach would not work well in all companies, especially ones where employees do not enjoy the freedom to generate novel solutions. Nonetheless, it is individuals who create innovative change not corporations or governments, and those individuals need freedom if they are to succeed. In Tom’s case, it meant leaving a large company to start a small one.
Companies without Designaxiom’s proprietor-driven insight into innovation often use benchmarking as a way to learn from the companies that are doing it right. The corporate powerhouse Siemens expends surprising amounts of human capital every year in an attempt to follow up on its promise of having a global network of innovation. The company sends its top management to organizations identified as being at the forefront of innovative practices. Furthermore, they create benchmarking partnerships with world leading companies in other industries. Last year Siemens VDO partnered with Sony, Renault, and Novartis to conduct an extensive study into world-wide innovation processes. This approach tries to define innovation as a series of quantifiable steps—which is seductively Fordian in its intent and may or may not be ultimately successful. One thing they have learned though is what works well in one company can be inappropriate in another.
EM Lesson Number # Three: Aspiring to beauty can be fatal, be prepared
Some companies are not ready for an innovation makeover that changes the fundamental nature of their organization. The very process of enabling employees to unleash internal innovation can initiate a series of events that could ruin them.
In their book, “What Went Wrong at Enron,” Peter Fusaro and Ross Miller write that Enron used its ability to innovate to adapt derivatives trading techniques employed on Wall Street. Six time winner of the Forbes Innovation Award, it used those techniques to trade oil and gas. Enron became the model company for the twenty-first century—buff, pumped, and, on the surface, healthy. The problem was that in spite of its staggering revenue Enron was not a strong company. When things started to go wrong and collapse loomed on the horizon, Enron used its well-honed innovation skills to manipulate the company’s accounting systems. The strategy proved fatal not only to Enron but to its auditors and investors as well. At Enron, innovation killed.
Compare Enron with Apple Computers. Apple is a company that has as its legacy a history of destabilizing innovation. Apple was declared dead only to rise again so many times that a casual observer would think it is company policy to self-destruct every five years or so. This roller coaster cycle may well be the price an R&D based company has to pay in order to be continually ahead of the curve. Apple can do it and survive because of its internal cultural fitness.
But what if your company does five million in revenue rather than five billion? Will the process of innovation lead it to self-destruction? As with those rich and powerful celebrities anxious to improve their appearance through surgery, there is risk. Companies that aspire to the beauty of true innovation have to understand that there is inherent instability in powerful change. To be good innovators requires the ability to manage the financial and organizational uncertainty that innovation can bring. Apple survives because Steve Jobs has created a corporate culture that has institutionalized the boom and bust cycle. Most companies though have to be prepared in advance in order to be up to the task.
Innovation, like beauty, is a complex subject, yet one that most people feel they understand innately. The truth is, innovation as a process is difficult to describe and even more difficult to build into a corporate culture. Even when a company’s success seems to illustrate its ability to innovate, that ability can disappear, or worse, turn on the company surprisingly quickly. Before you take your company under the innovation knife be sure you understand the lessons of Extreme Innovation Makeover. One way or another, your company’s life may depend on them.
Why bother to take the chance on innovation if it involves so much risk? The North American economy is well into its post-industrial phase. Production and now services of all types are commodities and those commodities are cheaper when produced offshore. In a globally outsourced economy, we have no choice but to innovate or lose our economic primacy. Want to guarantee your job? Innovate. Now.