Why Innovation Is A Necessity For Twenty-First Century Business

by Rod Collins

 

Today’s managers face a difficult and unprecedented challenge: The world is changing much faster than their organizations. Every industry, without exception has been overtaken by an accelerating pace of change that shows no signs of letting up any time soon. In a business world of increasing uncertainty, the one clear certainty is that the pace of change is only going to get faster.

As managers struggle to keep pace with a fast-forward world, they are increasingly becoming aware of a very troubling problem. They are discovering that methods and practices that have always delivered predictable results aren’t working anymore. Forecasts are suddenly unreliable as new disruptive technologies radically reshape markets. Cutting costs does not necessarily result in improved efficiencies and productivity. And proven analytical methods are now too slow and cumbersome to keep up with a fast-changing world. In a world where change is constant and longstanding rules don’t seem to work anymore, it’s not surprising that many managers feel overwhelmed by what appears to be a completely unmanageable state of affairs.

However, a fast-changing world it is not necessarily unmanageable; it just needs to be managed differently. According to the management thought leader Gary Hamel, many companies miss the future not because it’s unpredictable or unknowable, but because it’s unpalatable and disconcerting. Nevertheless, if companies are to thrive in world of accelerating change, they are going to need to learn how to manage differently. Rather than leading functional silos, they will need to become comfortable at building well-connected agile teams that are highly capable of innovation.

Innovation Is Connecting Things

Unfortunately, most managers don’t have much experience with leading innovation. They are much more seasoned in the ways of a management ideology where maintaining efficiency and control is the principle focus. However, in times of accelerating change, it isn’t the most controlled or the most efficient organizations that survive, but those that are the most adaptable and resilient. When accelerating change supplants incremental change as the norm, the capacity to innovate becomes essential for business sustainability.

When managers recognize the importance of innovation, their first move is often to set up a new department, put somebody in charge, and hold that person accountable for the new function. However well intentioned, the creation of an innovation silo is a flawed strategy. Innovation is not a department. It is an operating system that values customers over bosses, collective intelligence over individual experts, shared understanding over top-down direction, simple rules over bureaucratic procedures, and transparency over control.

Image courtesy of KROMKRATHOG at FreeDigitalPhotos.net

Becoming innovative means altering the fundamental DNA of a business and its management so that creativity, which the late Steve Jobs defined as the simple ability to connect things, becomes the fundamental fabric of the enterprise. Innovative companies are designed to accelerate the daily cross-pollination of ideas because they understand that innovation isn’t something that’s planned and manipulated; it’s something that’s facilitated and emerges. That’s why the strategic processes of truly innovative companies are inherently iterative and cross-functional.

Moving From Innovation To Innovation

Managing innovation is now a critical core competency for businesses across all industries. Whereas in the past, innovations tended to be more incremental and happened at a more measured pace, today innovation is more constant and clearly more disruptive. For example, in the mobile phone industry, we have had four different market leaders across the last four decades. In the 1980’s Motorola invented the cell phone with its brick-shaped DynaTac phone. The Finnish firm, Nokia, reengineered the product in the 1990’s by building a much smaller easy-to-hold version of the product. In the first decade of the twenty-first century, the Canadian company, Research in Motion, dazzled the market with the Blackberry and became a big hit with businesses by integrating e-mail and telephone into one device. And then, in 2007, Apple completely disrupted and redefined the market with the iPhone, creating a complete telecommunications portal in the palm of your hand.

While each of these four companies created a powerful innovation and quickly became market leaders, with the exception of Apple, none of these companies had the wherewithal to move from one innovation to another. The difference between being innovative and managing innovation is that, while any new entrant can be innovative by creating the next new thing, skillfully managing innovation is about moving from innovation to innovation.

A New World With New Rules

Management, as most of us know it, was invented in the late nineteenth century to guide business leaders in building and preserving sustainable business models, and maintaining highly efficient operations. Its disciplines were designed to support the core values of top-down hierarchical structures: planning, control, and efficiency. Accordingly, in the traditional management model, the fundamental work of the manager is to plan and control, and productivity is synonymous with efficiency.

The managers of today’s most innovative enterprises, however, loathe hierarchical management. The leaders at companies, such as Google, Amazon, and Zappos, are quite proactive in making sure that, as their organizations grow, they do not inadvertently slip into traditional management practices. Instead, they have created a different management model that is based on a completely different set of fundamental disciplines. This alternative model is designed for adapting and innovating rather than preserving and maintaining. Its disciplines support the prime values of learning, collaboration, and innovation. Thus, the fundamental work of the manager is not to plan and control, but rather to be the catalyst for collective learning and collaboration. And productivity is seen more as a function of innovation than efficiency.

A nineteenth century management model is unsustainable in a twenty-first century world. As the pace of change continues to accelerate, it is unrealistic to believe that a century-old management model will somehow endure while the rest of the world is reshaped by the technologies of the Digital Revolution. We live in a new world with new rules, and the old rules are fast becoming obsolete. That’s why innovation is a necessity for twenty-first-century business.

 

 

Rod Collins  (@collinsrod) is Director of Innovation at Optimity Advisors and author of Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books, 2014).