Where the hell did Innovation go?

Well as its suggestive from the name, creativity and innovation have lost their way in India. No one is sure where they are. I mean they were there perhaps 3 decades back but then they sort of disappeared. Let us talk in detail about what really happened to them? Just three weeks back I paid a visit to Barbeque Nation. This is a place I used to like a lot in the recent past. Unfortunately my perception has changed. That day was not any different. Barbeque Nation as a business has never thought about innovating at all. They haven't really given an iota of thought about how they could embrace change for the better. The cuisines they serve are the same, the buffet remains unchanged, the soups are still the neolithic ones they used to serve back in 2004. In 16 years they really haven't made an effort to use their creativity and innovation optimally to delight their customers. End of the day it becomes boring to go and eat the same stuff, you've been eating for decades. If they had invested in Culinary innovation and invested in some creative ideas, things would have been different from them. It got me thinking a bit about creativity and innovation, since I've heard this conversation umpteen amount of times from senior management professionals about the lack of innovation or an innovation based culture in their organisations. But before we go there, let's first understand what creativity and innovation actually mean. Let me put the definition Business Insider has come up with and its pretty solid.

Creativity-Creativity is about unleashing the potential of the mind to conceive new ideas. Those concepts could manifest themselves in any number of ways, but most often, they become something we can see, hear, smell, touch, or taste. However, creative ideas can also be thought experiments within one person’s mind.

Innovation-Innovation, on the other hand, is completely measurable. Innovation is about introducing change into relatively stable systems. It’s also concerned with the work required to make an idea viable. By identifying an unrecognized and unmet need, an organization can use innovation to apply its creative resources to design an appropriate solution and reap a return on its investment.

But when we talk in the context of companies, we tend to focus more on innovation purely because a system has already been created. It needs to be perfected and perfection is iterative in nature.With every iteration it acquires optimisation. Theodore Levitt puts it best: “What is often lacking is not creativity in the idea-creating sense but innovation in the action-producing sense, i.e. putting ideas to work.” Not many companies can do innovation. It could be a lot of things. Let's discuss in detail what could be the reasons. But before we do that let's talk a bit about some of the most innovative companies in the world.

One name that comes to mind when we talk about innovation is Nike. Nike has been perhaps the most innovative company in the world for many decades. Steve Jobs talks about Nike in this video and how Nike has been able to create a mark for themselves

https://www.youtube.com/watch?v=keCwRdbwNQY

They have been constantly delighting their customers with their products. And although they don't do rigorous marketing, their customers are hooked to their products. Let's talk about another company, Apple. Apple has been innovating for over 3 decades with their products. Most of what came post the return of Steve Jobs to Apple , were disruptive products that changed entire markets or created new markets. They understood the pulse of the market and were able to fulfil needs so intricately deep, that their customers were hooked to their products. Apple never wanted to focus on a larger market segment. They knew they were catering to a niche segment that was elite and had a rich taste in design. It worked for them. Before I take this car to a different road, let me mention SAP as one of those companies that took a major risk , when it invested in HANA. I was a part of the SAP HANA team back then amongst several dozen teams that were working under the able leadership of Vishal Sikka back then. All of us worked to make this dream a reality and we were able to build HANA that swept the market away from under Oracle's feet. It wasn't really an easy task and credit goes entirely to Vishal to come up with a dream and let it blossom and materialise. HANA was again a disruptive product.

If that be the case then why is it that a fraction of companies can do innovation and a lesser percentage out of that can do continual innovation for decades to come? Let's figure out the reasons. I guess there could be a plethora of explanations that can explain the exact reasons. Let's start with one. I have observed, that most companies that want to innovate aren't really trying to artificially create a culture of innovation. They on the other hand are trying to make their customers happy. How can you make a customer happy? Well if you create every process of your company around customer delight and ensure there is a causal relationship between customer delight and performance KPIs, also called customer centricity, then anything that you do to streamline a process, could be termed innovation. I can't cite a better example than Amazon, the most customer centric company in the world. They make the customer fall in love with them. They are not here to sell commodity. They are here to wow their customers. Its because of this, that their repeat customer base is huge with maximal stickiness. They do innovation because it helps , delight their customers. It could be incremental innovations or disruptive ones, but the sole intent is always to please the customers. So Customer delight could be a catalyst to innovation. It holds true for Nike and Apple as well.

However is that the only reason why innovation thrives in a corporate utopia? Guess not. I remember a conversation that transpired with a senior management leader of a virtualisation company,3 years back, where he expressed that there is a dearth of an innovation based culture in his organisation. He wanted my help to build a culture of innovation in his company. We did go ahead and helped him with his innovation management needs but it got me thinking more about the role culture plays in shaping the innovation index of a company. How does one create an innovation based culture in an organisation? Lazlo Bock in his cult book 'Work Rules' talks about how Google started with the 20% innovation week concept, where every employee could use a day in a week to work on projects of one's choice. That helped Google foster a culture of innovation democratically. But is that sufficient to build a culture? What if it doesn't really end up converting into innovation? Is there another variable responsible for innovation?

How about leadership? What if there is a charismatic leader who triggers a culture of innovation? Steve Jobs was said to be one of those leaders who believed in building a culture of innovation. He would create reality distortions around his employees and push them to their maximums to deliver an awe inspiring experience for the customers. But is that enough? I mean Tim Cook is also an awesome leader but under him Apple has had a slow march towards innovation. There has been an innovation deficit at Apple and no one knows why? Its not that they aren't trying but they somehow have lost the Midas touch they once had.

So after reading a lot of stuff and watching a lot of documentaries, I came across a singular fundamental fact. Innovation is merely a function of how effective a product is solving a customer need. If the product is state of the art and gets the job done easily for the customer, there would always be demand for it. Most companies that find it difficult to innovate , really do not know the degree of effectiveness , their products are in solving a customer problem. That sure explains why Craiglist, a site with almost zero Ux , became an overnight rage. Clayton Christensen(God provide peace to his soul), wrote about it in his last book 'Competing Against Luck'. The Jobs Theory , he proposes, seems to answer the riddle that innovation is. In simple terms when an organisation starts, the founders are well acutely aware of what their customer needs are. They deliver a product that solves the need better than any other product in the market. In doing that they achieve product market fit and go on and become a sustainable enterprise. But as the organisations starts to grow, there are managers who come and their job is to effectively manage the workforce and ensure the job is being delivered. Although there is a lot of organisational emphasis on innovation, it ends up either as a marketing punchline or some incremental innovations that perhaps provide some smiles on the customer's face. This is exactly the point of inflection where most companies and their workforce start avoiding the actual needs of the customer. We must keep in mind that the needs of the customers change based on the variable operating in the external environment. If that be the case then obviously the product or service or solution would need to change or adapt itself to solving the current need. Isn't that the actual reason why the horse carriage manufacturers went bust once automobiles came up on the streets of America? Although it is a difficult process to clearly understand customer needs from time to time. Another contributing factor that decelerates the process is the inability to take risks by the said managers. When a company becomes big, most managers tend to acclimatise themselves to a way of life where things are smooth and happy. They feel no eventual need to think outside the box and thus create a culture of complacency. This is exactly what kills a company several years later. Its because the managers don't have the stomach to take risks or are extremely scared to get into something that might fail. In a nutshell, they start getting as distant as possible from their customer needs. Their inability to understand if their products are providing the value they once provided can seriously undermine innovation in a company. But having said that, if we assume that constant efforts are being put by managers to understand more about customer problems. Will that solve the innovation crisis?

I guess the answer to that question is multi layered. If the aforementioned is responsible for understanding what kind of innovation would be required to provide maximum value to the customers. There are several other factors that are equally responsible for manifesting the solution to a viable product that can solve the customer need effectively. So it starts with superlative leadership that can have tremendous impact on the employees. To cut an example, When Abraham Lincoln was invited to deliver a speech at Cooper Union, most people did not have any hopes for him. He wore rugged clothes as opposed to his contenders who were dressed in the best elitist attires money can buy. On top of that Lincoln's mannerisms were a bit rustic when it came to sophisticated city folks. But when Lincoln delivered his speech, it was so electrifying that by the end of it, everyone was convinced, he is the right choice for a Republican nomination. That kind of charisma is rare to find but it is what convinces employees of a shared dream, they need to realise by working together. Having that kind of leader is a rarity these days. There is a beautiful HBR article that talks about the basic difference between great leaders and great managers and having a leader like Abraham Lincoln or Lee Iacocca or Steve Jobs or Billy Walsh is extremely rare in nature. But for the sake of convenience , let us assume that we have the kind of leader that is required. Will that guarantee innovation?

The answer lies in a book called 'Delivering Happiness', written by Zappos cofounder Tony Hsieh. Tony talks about the time when he was running Zappos before Amazon acquired it. He wasn't making any profit and he tried his level best to understand what was wrong with the company. In the end he understood that the only reason people come to Zappos is because the experience they have with Zappos is mindblowing. This revelation was ammunition enough for Tony to turn the company around. He wrote down a set of rules called the Code OF Conduct. Everyone was supposed to follow them religiously. The outcome of anything they did at Zappos was always supposed to be a 'Wow' experience for the customer. Tony and his leadership team ensured all employees took it seriously. They ensured every customer is so happy with the entire experience of buying sneakers at Zappos that they'd come back over and over again. They created every part of their processes around customer delight and converted Zappos into a complete customer centric company. In a span of a year or so every employee was trying relatively hard to go beyond their normal duties to ensure that whatever they do the customer needs to be delighted. In other words they changed the company culture and in the process became spontaneously innovative. But is that sufficient? Are we missing something? Well not entirely but a couple of things.

Let us talk about Israel. One of the most innovative countries in the World. But Israel wasn't really there several decades back. What really happened? Dan Senor and Saul Singer explain what really happened in their book 'Startup Nation'. Israel was as rudimentary as any other country in the beginning but they were determined to become the most innovative country. They tried all types of technological innovation and they failed miserably in the initial years. But instead of lamenting over their failures they did exactly the opposite. They started celebrating their failures. They started understanding the intrinsic nature of failure. They understood entropy surrounds us and the degree of disorderliness is so high that the probability of success is as minimal as possible. They made peace with that and started absorbing as many details as possible from the subsequent failures. They also realised the iterative nature of innovation. It was the revelation that Edison had before he came up with the bulb, where he said,"I haven't failed -- I've just found 10,000 that won't work.". It was their consistent tryst with failure the innumerable learnings that helped them evolve a notch further than most countries in the world. We don't see that trait in companies of the 21st century. Somehow the go to market velocity tends to avoid making any learnings from the failures. The market pressure takes over anything failure had to offer and temporal workarounds are set up to fix the failures instead of a comprehensive solution. That is like cheating yourself which clearly impacts innovation.

Last but not the least. Are all the aforementioned sufficient for innovation in a company? Well they are except one. One of the most important factor to carry out innovation in a company is creating the right set of environment to carry out innovation. Innovation doesn't really happen in a closed environment. It has to happen in a democratic environment and there should be willing stakeholders to support the process. I could cite the 20% per week innovation framework Google came up for innovation management. Superlative conditions like these trigger spontaneous behaviour amongst employees to dabble in innovation. Cutting an example, Marvin Kelly , head of AT&T Bell Labs back in 1950 to 1960, created an amazing culture that promoted innovation at all levels. He hired the best brains from around the world and gave them all the tools they required and all the facilities they needed. Guess what that did to the several thousand innovations that followed? Almost every piece of technological innovation that we use today was created at Bell Labs. Some of the behemoths who worked at Bell Labs under Kelly were mavericks like Steven Chu, Claude Shannon, William Shockley. Jon Gertner in his bestseller 'The Idea Factory' vividly mentions what it took Bell Labs to create the technological wonders the we use in today's world. They laid the exoskeleton for future innovations to follow through their monumental work. Eventually all Mervin Kelly did was providing the brilliant minds at Bell Labs the right environment and giving them all they needed. The rest I suppose is history.

Conclusively we can wrap the discussion by saying that we need a host of things to create an innovative company. We need to understand clearly the value provided by the products to the customers and how effectively is the need being taken care of. Products become redundant with time and thus it is pertinent to keep track of product effectiveness from time to time. Then we need sound visionary leadership that can effectively convince the employees of the shared dream, that needs to be manifested. Post that we need to create a culture where everyone believes in keeping the customers happy and delightful like Zappos.We also need a mechanism where you can ingest failure and learn from it. Understanding the iterative nature of innovation is extremely important before we make a leap of faith. Finally we need the right conditions to carry out innovation.

Unfortunately most companies cannot achieve all these fitments simultaneously. Its either a leadership issue or a culture that abhors innovation or employees clueless about customer needs or maybe capitalism goes a step further in decimating the right conditions for innovation. So the next time if you are in a discussion related to innovation, all you need to do is to ask them a couple of questions about their company and it would be apparent why innovation isn't happening? Sadly there are a lot of discussions around innovation but no one takes a detailed look to diagnose the symptoms correctly. The answer lies right there if someone were to unravel it in retrospect. As much as it is a quagmire, it is also a bottled opportunity for many companies that are serious about innovating. One can't really fight with change.