the
innovative LEDGER
An e-Newsletter from The Innovative Edge™ Inc.
Vol.
5, No. 9, September 2005
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Getting
Your Just Desserts in the Innovation Economy
By Jeff Govendo
Corporate
innovation is like a Sara Lee cake … nobody doesn’t like
it.
I
can’t say I’ve ever met a business leader who wasn’t
solidly in favor of increasing the innovation capacity of his/her
company.
And
right now, much is being written and discussed about our transition
to a so-called Innovation Economy, a movement borne out of recognition
that as commerce continues to globalize at a dizzying pace, new priorities
are quickly emerging in our nation’s corporations. With increased
competition from virtually every corner of the planet, traditional
measures for enhancing the bottom line such as cost-cutting doesn’t,
well… cut it anymore. These must be enhanced or replaced by
more daring and imaginative initiatives whose ROI tend to be less
predictable, and almost always less immediate.
For
example, company leaders are speaking of the need to become more truly
customer-centric, to appeal to the emotions of potential users when
dreaming up new products and services, and focusing on design rather
than pure functionality or ease of production.
Also,
they talk about taking risks. In a recent interview in Business
Week, GE CEO Jeffrey Immelt said, “We want to make it O.K. to
take risks and do things that aren’t just going to [produce results]
this quarter.”
I
believe Mr. Immelt’s sincerity on this, as well as the hundreds
of other chief executives who are taking his lead in aspiring to a
more innovative culture in their organizations. It’s important
to recognize, however, that in so doing, they are attempting to shift
away from a hundred or more years of entrenched homage to the almighty
quarterly report, to which Mr. Immelt is alluding in his comment.
Since
the dawn of the Industrial Age and emergence of the public corporation,
the quarterly report has probably been the single biggest shaper of
corporate behavior and decision-making. In a less globally competitive
time, it undoubtedly served companies well, leading to sustained and
predictable growth. In my opinion, though, dogged adherence to it
– and the short-term thinking that accompanies it – is what’s
largely responsible for the condition of such corporate icons as General
Motors, whose once-dominant market share continues to slide because
of tactical, risk-aversive decision-making over many, many years.
Thinking
beyond what the numbers might look like in March or June (or, for
that matter, March or June of next year) involves living with risk,
and historically most large companies (and plenty of smaller ones
too) have not done well with that.
But
let’s not talk of corporations as de-personalized entities. A
corporation is, after all, a collection of people, and whether
a company does or does not succeed at innovation will depend on how
these people are encouraged and rewarded for coming up with new ideas
and taking bold initiatives, some of which are bound to fail.
As
always, the question is: are business leaders simply giving lip service
in their stated intentions, or truly supporting innovation by modeling
open-mindedness, instituting the appropriate incentive and reward
systems, and making available the resources to carry out new ideas?
Also, are they willing to forgo the immediacy of short-term quarterly
returns in favor of more far-reaching strategies?
It’s
clear that in this new century you simply cannot cling to cherished
old ways of doing things and hope for continued success.
Or
as Sara Lee might put it – have your cake and eat it too.
