Essays on Management: Managing innovation

If we understand what innovation is, where it comes from, and the environment to support it, how can it be managed?  Managing innovation involves learning, envisaging, managing risk and fear, and implementing.

As Alexander Pope said:

A little learning is a dangerous thing,
Drink deep, or taste not the Pierian spring:
There shallow draughts intoxicate the brain,
And drinking largely sobers us again…

Learning is pervasive in everything, and makes all things possible if you drink deeply enough.  It occurs by watching, listening, reading and dreaming.  Some people learn by one-way dialogues without listening, and by writing for no other reader.  The process of doing so may involve no communication with anyone else, however it helps some people clarify their thinking and turns it into learning.

Learning requires focus on a domain within which opportunity can be created.  It . requires a granular focus on what we seek to learn within this domain. Innovation depends on asking focused but open questions.  In learning, asking the right questions forces the cognitive processes and interactive learning needed before any worthwhile answer can be generated.

People learn from successes and also from failing.  People should be expected as well as allowed to fail.  Many failures such as Churchill and Lincoln later became great men.  On a more humble note, our own Mike Moore rose from a working class background to an MP, was voted out, got a job as a night watchman, became an MP and then a Prime Minister, lost an election, and then reinvented himself as head of the World Trade Organisation.

There is a need to build learning and feedback into organisational processes and make them habits.  Once something has been learned it is important to internalise that learning in procedures and standard operating practices.  Like tribal rituals, systematisation, manuals and standard operating practices are a way of codifying learning and allowing it to be productive, however if you ever forget why these were put in place it is time to review them.

Innovation requires “unlearning” and abandonment of the past.  It means terminating old products and processes and the organisational structures that support them.  IBM for many years failed to do this as it was paralysed by its belief that computing was about hardware not software.

Abandonment of old products and old markets is best done systematically.  Systematic abandonment of products does not mean heartless abandonment of people or the competencies they embody.  It means encouraging them to unlearn and reapplying them to new roles.

Innovation requires shifts in resources and this means starving problems to invest in opportunities.  It is important to get your highest performing people to focus on tomorrow’s opportunities, not on defending the past.

This implies that data tracking what is growing and what is shrinking is available, is construed, and is acted on.  Such quality data is often difficult to create, however it repays the effort.  When things go wrong in both private and public service organisations the noisiest and most salient problems generate the most attention and inadequate effort goes into things that can grow.  No business or public sector organisation should allow its top management time and other key resources to be sucked up by problems to the extent opportunities are starved.

A responsive democracy opens itself up to concentrated lobbying by groups who cannot make it on their merits in a globalised world and instead seek special regulatory or other privileges, often through coercive threat.  Declining industries and constituencies often become the most militant and avidly seek government protection or subsidy.  This is often at the expense of atomistic and inarticulate communities whose interests may be lost sight of because they are voiceless.

A good way of countering today’s pressure points and lobby groups is to quantify the energy they soak up, and ask what opportunities this means starving.  This in turn forces energy and attention to focus on looking for opportunities that make better use of an organisation’s energies and abilities.  These opportunities will be found if they are looked for, and from this learning, managing innovation will become possible

Envisaging is an entrepreneurial trait, it requires the ability to say ‘I can and will do it’ and to “put yourself out there”.  Entrepreneurs are made not born and investors should back them before they back their ventures –back the jockey and not the horse.  Innovation is often best to start with looking at things from a different angle and rethinking the basic principles that could be applied.  For example, it may be wise not to improve an existing process and instead find a way to rethink the process or way of doing things.  It is best not to catch up with an incumbent or competitor but to leapfrog and get ahead of the game, or change the game, or envisage a new one.

It is often outsiders such as immigrants, those from different cultures, with eccentricities or “learning disorders” who are most innovative and entrepreneurial.  Steve Jobs’ father was a Syrian immigrant who came to the US to do a doctorate.  Immigrants are disproportionately important in the innovation systems of countries as diverse as the US and New Zealand.  In the US, immigrants patent disproportionately in new and emerging fields rather than in older industries and technologies.  Understanding and managing people from such backgrounds is important to innovation management because it involves important elements of seeing things differently.

In innovation, it is important to be prepared to support acts of great presumption.  This can mean bending reality and pushing for perfection.  Top business people often attack, ignore or destroy business conventions.  Innovators often challenge the status quo and try and destroy it.

Opportunity favours the prepared mind as well as minds that see things differently or make new connections between existing knowledge.  One successful innovator can act as an inspiration for others by showing what one person can do.  Much of the Christchurch electrical and electronics industry owes its existence to Angus Tait’s vision and his example of what is possible.  On a much grander scale, Henry Ford was a chief engineer for the Edison Illuminating Company and this gave him confidence in entrepreneurial leaps forward.  Edison was an inspiration for Ford, and argued that Ford not try and run his car on electricity.

Ford did not invent automation – the American arms industry used assembly line production techniques well before Ford rediscovered them.  Ford also observed Chicago meat plant chains removing meat from carcases until nothing was left.  He adopted this concept but reversed the process, adding all the components to the line until there was a completed vehicle.  Ford’s envisaging was to turn cars from being status symbols to being low cost commodities.  Ironically, the later troubles Ford faced resulted from him producing only one product, rather than using common components combined in different ways to produce different products.

Innovation requires focusing and making selective choices.  Competing research and innovation proposals should be presented together so they can be compared, assumptions need to be stated and worst case scenarios set out.  Where a potential innovation is based on natural sciences research, the existing body of knowledge should be respected and built on and not duplicated.  It may need to be challenged since much scientific progress involves the systematic destruction of past bad science.

Creating anything involves the risk and often the actuality of failure, and fear of bankruptcy and humiliation.  Innovators are most effective when they can learn from failure, and turn fear into motivation.  Fear in policy making is a worthless emotion.  Fear in innovation can immobilise and destroy, or can be harnessed.  Fear focuses attention on what matters and concentrates cognitive energy on what needs to be done to succeed.  If fear can be harnessed this way, it provides powerful momentum for innovation.

Successful implementation is what realises returns from innovation.  Once an innovation is first commercialised, implementers, doers, production staff, trades people and production processes need to be leveraged to achieve commercial returns from it.

Profitable implementation can then breed complacency and the risk of no new innovation.  To be successful in business requires systemisation and consistency and yet this is what makes one predictable and therefore vulnerable to competitive attack and longer term business failure.  Market dominance leads to irreversible investments in existing technology, jobs management positions and organisational configurations.  A laurel is good to earn, but if rested on it quickly wilts.

With few exceptions dominant firms tend to lose their dominance.  In a world of mass information available to everyone organisations have to strive harder for unique knowledge that creates opportunities.  For these reasons continuous innovation is needed and this requires both core implementation and productive competencies in an organisation and active searching for new ideas that will drive future innovation.

In a fast-moving world products, processes and business configurations start going out of date the moment they are launched.  The Dot.com crash occurred partly because businesses were not configured to deal with web-mediated market exchange.

Continuous innovation in a business therefore needs to balance core capabilities versus new skills developed for tomorrow, and defining new opportunities versus earning returns from existing ones.  It also means business being prepared to make its own product obsolete before a competitor does.  Therefore, when innovation has been managed through to implementation it is time to recalibrate, focus externally not internally, and aim to make your own business obsolete through innovation, and like Steve Jobs, stay ever-hungry.

THE END

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About Peter Winsley

I’ve worked in policy and economics-related fields in New Zealand for many years. With qualifications and publications in economics, management and literature, I take a multidisciplinary perspective to how people’s lives can be enhanced. I love nature, literature, music, tramping, boating and my family.
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