Learning About Innovation

The word “innovation” is everywhere these days, just like “quality” used to be. You’d think there would be a clear, well-defined set of best practices for chief executives.

But innovation is a vast subject, filled with mystery, as I’ve discovered in deep dives at Corning, FedEx, IBM and Medtronic over the years. And I continue to learn, both at this magazine’s roundtable on the CEO’s role in innovation, co-sponsored by IBM (see page 50), and in other recent conversations.

First of all, there’s confusion about the word “innovation” itself, so you have to define what kind of innovation you’re talking about-product, business model or business process. Then you have to define whether you’re talking about incremental innovation, such as a brand extension of toothpaste, or more radical, breakthrough ideas. Those processes have to be managed very differently, and companies need to have both underway at the same time. There are also different sources of innovation-from internal R&D, a partner or outside company, or a center of research like a university. It’s almost as if we need to invent a whole new vocabulary.

There also don’t seem to be hard and fast rules that CEOs can follow. Sometimes you need to call the direction for your troops; other times, you need to respond to what a customer wants or what an inspired employee recommends. Sometimes you need to nurture the innovators with funds and high praise; other times, you need to cut short projects that just aren’t going to make it. One of the only things that’s clear is this: Just like we learned that quality has to be built into every process and every product, we know now that innovation has to permeate all corners of an enterprise. It can’t be

segregated.

In managing all this, it may be that a CEO’s softer skills are more important than formal processes. Getting innovation right seems to require genuine wisdom and a knack for understanding which people have what it takes to see their ideas through to fruition. I’m indebted for this insight to Hamsa Thota, head of the Product Development and Management Association, which tries to spur best practices. What’s the key to innovation? “It’s the people, stupid,” Thota says. He notes that the standard process of winnowing out the best ideas and having them survive various tests, or “gates,” of profitability or market acceptance may work for a company at a certain point of time. But within five years, the markets will have changed, people will have changed, and that old process is now more of a hindrance than an asset. He notes that Motorola was able to rush out its winning Razr cell phone precisely because it was developed outside of the company’s traditional innovation processes.

The lesson: Value people more than you value processes. Ultimately, the reason no one can define “innovation” in a textbook is that it depends on complex human interactions. I think we all have to keep learning about this fascinating subject. I’d be interested in your views.