In the July issue of this magazine, innovation was deemed critically important for achieving business success. That theme continues this month with the cause-and-effect relationship between successful innovation and profitable companies. Successfully innovative companies make money—usually lots of it—because they respond not only to current customers’ wants and needs but also by anticipating customers’ future demands. Along the way, “innovation-forward” companies reap the financial rewards generated from increased sales and greater market share. Industry leaders like Nike, Amazon and Google do this rapidly, effectively and continually. They prove that innovation done right is profitable and liberating.
But what drove these leading companies to become innovators in the first place? Fulfilling consumer expectations is a key factor in a company’s drive to innovate. Customers demand products and services that improve their lives and save them money in the process. Today’s want-it-now mentality is fueled by consumers being hyper informed, always connected, and having more options to buy then ever before. We won’t accept mediocrity because we know we can always go somewhere else to get it — and usually at a lower price.
Which is why innovation is spoken fluently — from the shop flop to the board room — in the universal language of business. According to a 2010 McKinsey & Company survey, 84 percent of global executives believed innovation was extremely important to their growth strategies. Yet, 94 percent of these global executives were unsatisfied with their innovation performance. Could innovation be like the weather: Everybody wants to experience the best weather, but nobody does anything about making it so?
Perhaps, though, change is in the air. Recent trends involving innovation processes and factors involving globalization, outsourcing (and its cousin, “onshoring”) have changed the way companies compete both locally and globally. Companies such as Gainesville’s Mobiquity — which operate locally, yet serve a global audience — use innovative processes to drive down costs, raise productivity and improve market competitiveness — all while pushing to increase profits and pursuing future growth opportunities.
Innovation is a choice, not a requirement, of companies looking to succeed. Companies’ operating playbooks have varying amounts of innovation, and many businesses have done nicely, thank you, with limited amounts of innovation. Those companies’ innovation game plans involve delivering quality products/services and updating them so that customers are satisfied, while the company maintains market competitiveness. This “innovation-lite” approach is very much alive — and is often the best-practices approach for companies that sell products (or services) with long life cycles and limited opportunities for innovation.
How innovation factors into your game plan depends on many factors. Most involve a company’s access resources, the time it takes to bring innovations to market and management’s overall operating strategy and execution plan. All companies approach innovation differently, so please keep that in mind when solving your company’s innovation equation.
Recognizing Personal and/or Professional Intersections
A great way to start is by reading Frans Johansson’s, “The Medici Effect.” In his book, Johansson shows how breakthrough innovations occur by digging up concepts from one field and transplanting them into new, unfamiliar territory. The resultant innovations — often game-changing — are based on combining your personal and/or professional intersections. By citing compelling examples in proving his thesis, Johansson demonstrates that innovation occurs when innovators (the best are renegades) look beyond the status quo, step out of their comfort zones and “mash up” seemingly disparate combinations in ways that are both surprising and effective.
I heard this for myself in October of 2012 when Johansson delivered the keynote address at the UF Engineering Leadership Summit. In his passionate talk, Johansson pointed to the importance of intersections and how innovation relies on collisions between people of different cultures, ethnicities, expertise and experiences. Summit attendees heard that teams comprised of multidisciplinary and disparate individuals are more likely to generate larger numbers of innovations than teams comprised of like-minded and similarly experienced individuals.
Johansson opined that diverse teams unleash a wave of new, creative ideas. So the next time innovation beckons you, combine the most unlikely groupings of people and ideas you can imagine. Once done, you’re en route to a place where successful innovation flows freely and effortlessly.
Transforming Identifiable Patterns into Innovations
History’s incomparable thinkers recognized that deep, subtle patterns existed and that exploring them would lead to major discoveries and innovations. Scientists such as Albert Einstein and Marie Curie used a patterns-identifying approach to look deeply at the world around them in determining what drove innovation. Similarly, Charles Darwin concluded that all complex and diverse life forms are linked by a pattern called evolution by natural selection.
Patterns are all around us. Innovative businesses identify those patterns to understand when it is best to pursue new opportunities or how to defend against threats to existing operations. The key is to identify — and trust — patterns. Data is important, too, especially given that “big data” is almost always mentioned in how technology drives innovation.
But you don’t have to be a geek to understand and apply patterns. Start, first, by identifying patterns within your own business and look for evidence — data — that supports the pattern you’ve seen. Next, trust trends because data, on its own, cannot predict the future. Data can’t tell you where your company is headed, only affirms what is already known about the company’s past. Data will tell you that profits are flat or down, while pattern recognition provides new perspective on how to reverse (or capitalize) on trends, solve emerging problems and/or prepare for expansion or scaling back. And finally, take what you’ve observed and use those observations to create your company’s innovation strategy.
Following that three-step process can lead to positive changes in your operations. If those changes occur, be satisfied with the outcomes and aggressively banish perfection. Innovators know that chasing perfection is a fool’s game; doing so stalls the innovation process and stymies growth. Be satisfied with “good enough,” which is perfectly good enough for an innovative company like Microsoft. Microsoft followed that approach to creating a multi-billion dollar company that has long sat atop a multi-trillion dollar industry.
Similarly, when a pattern portends negative prospects, take proactive steps that minimize your company’s downside risks. Positive or negative patterns notwithstanding, position your business to profit from its ever-improving pattern-recognition skills. And in the process, be like Einstein, Curry and Darwin, and never stop being curious, imaginative or simply asking, “Why?”
Unconventional Thinking and Uncommon Actions
Innovation thrives in a dynamic, vigorous environment where unconventional thinking is encouraged and rewarded. Newer, entrepreneurial companies often have employees who take pride in being pioneers and trailblazers; these people see themselves as renegades possessing unconventional thoughts and uncommon actions.
“Why join the navy if you can be a pirate?” — Steve Jobs
It’s too bad wanting to be a pirate goes away as we age. Companies are like people in that they, too, lose the desire to be a pirate as they age. That’s because as companies grow larger and older, they encourage their employees to seek out structure and become more conventional in their thoughts and actions. This shift to conventional thinking and “normal” conduct stymies the less rigid behaviors that define — and fuel — a company’s innovative, dynamic culture. Employees think in conventional terms and operate the company using structures and processes — with not a pirate in sight.
But there’s a way to reverse this aging process when it comes to innovation. In her book, “Renegades Write the Rules,” Amy Jo Martin describes how unconventional thinking and uncommon actions spark innovation. Martin is an expert in branding and social media, yet she understands why debunking the status quo requires a renegade’s thoughts and actions. Martin defines a renegade as one who “colors the lines without crossing the line.” Innovation — whether performed by renegades or compliant followers — can be thought of similarly.
Unconventional thinking and uncommon actions are cultural characteristics that do not grow naturally in companies. They must be encouraged and nurtured by senior leadership or initiated by rank-and-file employees. Simply, renegade behavior does not result by flipping a switch and autopiloting the company. What’s needed is an environment where all employees are encouraged to think using imaginative and unconventional methods — and to act in similarly non-traditional and uncustomary ways.
Transforming your company into an innovative and imaginative one is easier than you think. But doing so is a lengthy process, so start by first taking the company out of its “comfort zone.” Change is never comfortable, so go slowly, and don’t veer off course. Next, create an environment where employees merge intersections, identify patterns and practice unconventional thinking without retribution. And, finally, actively recruit employees and enlist them as pirates and renegades. Allow them to roam the ship in search of undiscovered intersections and hidden patterns. Do this and you’ll end up with a profitable company that is guided by dynamic employees who are empowered to do innovation right.
David Whitney serves as the Entrepreneur in Residence in the University of Florida’s College of Engineering. In addition, Whitney teaches Engineering Innovation to both undergraduate and graduate students at UF. Whitney is also the founding Managing Director of Energent Ventures, a Gainesville-based investor in startup companies.