It seems that wherever you turn these days, you hear about innovation. Nations and regions all over the world have innovation initiatives such as the NII in the US, which is run by the Council on Competitiveness and the European initiative on innovation being led by CORDIS. Many businesses have integrated innovation into their overall strategies and marketing campaigns, such as the Innovation that Matters initiative we at IBM launched earlier this month in conjunction with an advertising campaign around the theme of What Makes You Special?.
For a while now I've been intrigued by innovation’s emergence as such a hot subject. One conclusion I have come to is that the major reasons for all the activity around innovation are all the changes taking place around technology, business and society, which I believe are historic in nature and which may have the kind of impact on us in the 21st century that the Industrial Revolution had on previous generations.
But, while viewing innovation in historical terms is a useful way to get a grasp on the “big picture” of what is going on, that is certainly not what drives a business competing in the marketplace day in, day out. So, there have to be more “down to earth” considerations. Last week I heard a couple of talks – by Burt Rutan and Geoffrey Moore - that complemented my view of innovation from interesting and different angles - at the PartnerWorld 2006 conference, IBM's major worldwide conference for our business partners.
Burt Rutan is an American aerospace engineer who is most famous for his design of Voyager, the first plane to fly around the world without stopping or refueling, and SpaceShipOne, the first privately funded suborbital rocket plane. He is not only a world-class engineer but an inspiring leader and entrepreneur who clearly knows a thing or two about innovation. He made two points about innovation that particularly resonated with me. The first is that if you want teams of people to perform at an extraordinary level, you need to challenge them with problems that really inspire them. People love to work on and solve problems that seem impossible to everyone else, and if you can tap into that emotional energy, you have a really charged-up, motivated team. But his second point was that people will rarely perform at such levels when they are relaxed and happy. In order to reach inside yourself and find that something extra needed for true innovation, you have to feel the stress that comes when you know that it is absolutely crucial to come up with a solution to the problem.
This felt so true to me, because I am convinced that the combination of “seemingly unlimited possibilities” and "necessity as the mother of innovation" is responsible for the current interest in -- and importance of -- innovation.
Let me explain. With all the advances in information technology, standards and the Internet in particular, we can now tackle problems in all kinds of areas that would have been considered impossible just a few short years ago. These areas include information-based medicine, the use of RFID in supply chains, highly visual simulations in engineering design and advanced supercomputing applications in the finance industry. There is something very romantic about "reaching for the stars," solving problems no one has ever solved before and building something qualitatively different from anything that existed in the past which is driving innovation in field after field and industry after industry.
On the other hand, the challenge of survival in our increasingly competitive business climate is anything but romantic. This is a point that was very nicely addressed by Geoffrey Moore at the PartnerWorld conference. Moore is a best selling author and venture capital partner in Silicon Valley. He is particularly known as the author of Crossing the Chasm, which explores the various stages of adoption of high technology innovations. His new book, Dealing with Darwin, focuses on how companies can leverage innovation to differentiate themselves to compete -- and survive -- in our increasingly global, commoditized and deregulated marketplace.
Moore makes the point that when market environments change, as is certainly the case today, previously successful business strategies will no longer work, no matter how much you try to fix them. Companies that are unable or unwilling to adapt to the changes in such a "Darwinian" climate -- due usually to the inertia that makes them want to continue doing what made them successful in the past -- will become marginalized or extinct. The only answer is innovation that can significantly differentiate the business from its competitors and lead to customer preference. However, in our highly competitive global economy, what differentiates you today will be quickly emulated by others around the world, so the bar for innovation and differentiation keeps getting higher and higher.
The challenge for any business is, in part, to find the resources to invest in today's faster innovation cycles, and those resources can only come from constantly optimizing and achieving productivity in their legacy businesses and processes. This is much easier said than done, but it is absolutely critical to a successful innovation management strategy.
Consequently, a business or institution of any kind -- whether in government, healthcare, academia or any other area of human endeavor -- needs to think about innovation as a principle, a pervasive set of behaviors and skills that underlies every aspect of its operations, its strategy and its relationships. In historically dynamic times like these -- the inflection points of really big shifts from one era to another -- simply innovating aspects of an organization in one or two areas will not be sufficient. The winners -- not just of the current competitive battles, but those who aspire to shape the future of commerce and society – need to reimagine and reinvent a lot more than products, services or even processes. They need to rethink basic business models, management systems, organizational relationships and broader policies.
Most leaders in business today recognize these complementary drivers of innovation – new possibilities as well as sheer necessity. We have never had more powerful capabilities at our disposal and more exciting opportunities to use them -- but so does every business all around the world, from mature ones struggling to survive to the many startups fighting to take their place. No wonder innovation is such a hot topic today.