I’ll provide some feedback on the event once it is complete.

1. They need immediate results
2. They fear cannibalization
3. They are familiar with slow, continuous improvement

All of these facts are true, yet they fail to convey the full picture.  When we at OVO work with clients, we can see two competing forces at work:  the desire to be more innovative, competing with the need to be effective and efficient and to deliver the quarter.  The urgent always wins when matched against the important.

It’s not that managers don’t want to innovate, it’s that they recognize the work involved and carefully balance how much work, and risk, and time executives will make available for innovation, and come to the often reasonable conclusion that innovation is a distracting exercise which won’t result in a positive outcome AND will impact the short term.  This isn’t venal – it’s actually working to the best interests of the corporation.

I’ve worked with plenty of “middle managers” who understand the need for innovation, who want to innovate but don’t have the resources, time or agreement from their executives.  The kind of investment required to do more than simple incremental innovation must come from an executive commitment or vision.  It won’t “bubble up” from staff or middle management.  They already have 60 hour week jobs.

One other point, about cannibalization.  It’s not just managers who are concerned about cannibalization.  I’ve been in senior executive meetings, and even board meetings, where excellent new products were rejected because they threatened the profitability or viability of existing products or revenue streams.  What you see in mid-management levels is just prescient prediction of the reaction of senior executives.

As Jack Welch said – show me a person’s timecard and I’ll tell you how they are evaluated.  Clearly, managers are paid to:

1. Deliver in the short run with less emphasis on the long run
2. Protect the status quo
3. Tweak the products, not disrupt the product or market

Smart managers understand how to maximize compensation and reduce dissonance and risk.  You want more innovation?  Change your evaluation and compensation structures to encourage it.  Ask for disruption and cannibalization of existing products and markets.  Demonstrate the importance of innovation by funding it appropriately and giving it time to mature.

Here’s a link to a recap of my presentation and here’s a link to a short interview after the talk.

Executives want efficiency and effectiveness, but don’t place a lot of emphasis on “how” work gets done.  In fact executives get impatient with existing processes and business as usual if it appears to slow or stymie new products or pet projects.  Conversely, most of the staff believe that business as usual is onerous and unyielding, impervious to new ideas.  Staff are just as likely to ignore business as usual and find work arounds as they are to follow it.

A good friend told me that the Germans have a word for middle managers – they call this segment of the employee population the Lehmschicht which translates roughly to a “bed of clay”. What they mean is a rigid, impervious layer that does a poor job of communicating staff ideas upward and vision and strategy from the top down.  Here’s a story about a proposed takeover of Suzuki by VW.  The article suggests the CEO of VW had a difficult time imposing his will until the Lehmschicht was “retired”.

Now, middle managers can be the impervious bed of clay, stubbornly clinging to efficiency and effectiveness, or they can become the bedrock foundation for new innovation.  The more tightly any organization clings to business as usual, the more likely it is to face obsolescence.  Shifting to a balance between innovation and business as usual won’t be easy, but is vital for success

First, you need to consider the staff you have and their relationship with the culture.  It’s possible your staff is highly attuned to efficiency, and you need more people with more creativity and innovation.  You’ll need to recruit a new type of person, and perhaps define new kinds of roles to bring new thinking into the organization.

Second, you must capitalize on the great people within your organization, restoring a balance between innovation and efficiency.  This means you should apply as much training to innovation and creativity skills as you do to efficiency and productivity skills and tools.  What would happen if you placed the same emphasis on innovation when offering training to your team as you did to efficiency?

Third, you must put compensation plans in place that reflect the outcomes you want.  If you want more innovation, then your evaluations, compensation schemes and reward structures must reflect the value that innovation has for your business.

Every Human Resources and Talent Management executive, take note – innovation is very important, and the role your team plays to support the three R’s – recruiting, retraining and rewarding – will determine how much innovation is possible in your firm.

• Innovation requires a powerful, visionary leader.  Can you name the CEO of Gore, 3M or P&G? Plenty of firms are innovative, yet many of these firms aren’t lead by visionaries, and innovation doesn’t originate at the top.
• Some industries demand more innovation.  Yes, but all industries need innovation.  Some industries, due to competitive pressures or consumer demands require more innovation than others, but all industries will require more and more innovation.
• I don’t need to innovate.  I can be a fast follower.  This may have been true historically, but the pace of change has accelerated.  Fast followers often miss innovation windows.  Fast followers don’t understand what’s valuable in a competitor’s product and what’s missing.  And staking your existence on being a fast follower means being able to accelerate your ability to respond as the market speeds up.
• Innovation is sporadic, accidental or occasional at best.  Your firm can control and sustain innovation over time.  Good innovators demonstrate that innovation is a business discipline, not a happy accident or an ad-hoc capability.

The reason these myths are important to eliminate is that they create thinking barriers for innovation.  If we believe that a visionary CEO is necessary for innovation and we don’t have one, well, then, we’re off the hook for innovative thought.

What’s true is that any firm can become a consistent, persistent innovator.  It takes time, focus, intent and changes to business models and skills, but any firm, in any industry, can become a Relentless Innovator.  One of the first things you must do is eliminate these flimsy excuses and get on to the real work of innovation.

The topic last week was “balancing innovation and efficiency” which is the basis for Relentless Innovation.  Both efficiency and innovation are important, but I believe that the vast majority of management attention and emphasis has been placed on efficiency in the last few years.  Relentless innovators demonstrate that a balance between innovation and efficiency isn’t just desirable, it’s actually possible.

During the Innochat we had a range of commentators who offered their perspectives and insights.  I believe that Six Sigma, Lean and other factors that promote greater efficiency unintentionally create barriers for innovation.  Some commentators thought that was fair, others felt that Six Sigma is good for incremental innovation, and some thought Lean could be used for greater innovation purposes.  One concept we circled around was whether or not too much focus on these tools created mindsets and perspectives that were too focused on fixing what exists, rather than creating something new.  Or whether cost cutting and efficiency efforts create a short term mentality.

The record of the tweetchat is linked here: Innochat Recap, (the tweets are in reverse chronological order) and a nice summary of the tweet chat was created by John Muldoon.

Note that I’m not advocating a reduction in focus on efficiency and effectiveness, but an increased focus on innovation.  Good firms must use inputs and resources efficiently, but increasingly they must accelerate the development of new products and services through innovation.  What we are advocating is a return to a balance between efficiency and innovation.

But what if you need to do something different?  What if the typical outcomes aren’t enough?  Can you extend the existing tools to achieve new and different goals?  What if you need new tools to reach for the new goals?  This is a real concern for innovators, who realize that the existing tools won’t help a team achieve new ideas, and that the comfort level with existing tools is awfully strong.

So, what many teams will argue is that the tools for innovation are publicly available, and, in fact, many on the team are familiar with the tools – scenario planning, gathering customer insights, brainstorming and so forth.  That kind of thinking is dangerous.  Simply because I have a set of tools – a hammer, a saw and a level – doesn’t make me a carpenter.  There’s a significant gap between owning the tools and having an understanding and appreciation for their effective use.

Many corporate attempts at innovation are similar to people who have a tool box but aren’t competent carpenters.  They are aware of the tools, have some basic understanding of their use, but lack familiarity, context and competence.  A deeper understanding of how and when to use the tools is necessary for success.

So there are two possible failure points when innovating, at least in regards to tools and methods.  The first is the reasonable assumption that we can extend our existing tools and competencies into generating new ideas.  What typically happens in this case is that the ideas are incremental, because that’s all the existing tools can comprehend.  The second failure point is that we assume that since an innovation team has an introduction to new tools, that the team is fully competent in the use of those tools.  Clearly, owning a saw and a hammer does not make a person a competent carpenter, and reading about innovation tools but never using them doesn’t mean a person is a competent innovator.

For really interesting new ideas, your team will need to embrace new tools that are different in nature, scope and use from existing tools and methods.  You can’t create radical innovations relying on existing tools and methods.  Then, once the realization sets in that new tools are needed, you’ll need to gain experience and competence in the use of those tools.  That means you’ll need training and assistance in the beginning, and the opportunity to use the tools consistently in order to gain experience and knowledge.