Strategy. Innovation. Brand.

Innovation: Loosen Up, Tighten Up

Loosen up, dudes!

Loosen up, dudes!

I’ve written a lot about innovation but have yet to properly introduce Rosabeth Moss Kanter, one of our leading thinkers in innovation and change management. A professor at Harvard Business School, Kanter has written a string of books on innovation, incuding some of my favorites: Confidence: How Winning Streaks and Losing Streaks Begin and End and SuperCorp: How Vanguard Companies Create Innovation, Profit, Growth, and Social Good.

Today, I’d like to draw on concepts from one of Kanter’s articles in Harvard Business Review, “Innovation: The Classic Traps“. Kanter surveys a number of different traps but two, in particular, caught my attention, mainly because I’ve seen them myself.

The first is called controls too tight. All too often, companies use traditional metrics to judge the impact of non-traditional innovations. The problem is that traditional metrics — such as hurdle rates, ROI, or NPV — all require some type of track record to produce results that might be considered reliable.

The problem, of course, is that a truly innovative product has no track record. Kanter writes that companies often fall prey “… to the impulse to strangle innovation with tight controls — the same planning budgeting and reviews applied to existing businesses.” ┬áKanter writes that the solution is to loosen up and add flexibility to your planning and control processes. This may include innovation funds and judicious exemptions for corporate requirements and timetables. Going a bit farther afield, you might also incorporate new financial metrics like real options analysis.

The second trap might be called connections too loose. The idea is that companies often isolate innovative new products and processes in organizational units that are physically and/or culturally isolated from the mainstream. Kanter points out that GM’s Saturn brand was established as a separate unit to pioneer new ways to design, build, and market midsize cars. While Saturn itself was innovative, the innovations didn’t have much impact on the rest of GM.

The same trap can affect established units as well. Kanter points out that CBS was once the largest broadcaster in the world and also owned the largest record company in the world. But MTV, not CBS, invented the music video. Kanter also writes that “… Gillette had a toothbrush unit (Oral B), an appliance unit (Braun), and a battery unit (Duracell) but lagged in introducing a battery powered toothbrush.”

Again, I think we can go a bit farther afield and identify similar disconnects among departments within a company. Engineering designs a product and then turns it over to manufacturing. That’s often a loose connection. If manufacturing experts participated in the design process (as they do at Apple), you might get products that are not only well designed but also easy to manufacture.

What to do? Kanter writes that “… companies should tighten the human connections between those pursuing innovation efforts and others throughout the rest of the business.” This requires good leadership, good communication skills, and a willingness to “convene discussions to encourage mutual respect rather than tensions and antagonism.” It may also require good architecture as in the example of Steelcase, which built ” a design enter that would force people to bump into one another….” (This is one of the reasons I think Marissa Mayer at Yahoo! is right to require people to work at the office).

So how do you stimulate innovation? While it’s not easy, a good first step is to loosen up you processes while tightening up your people-to-people connections.




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