Innovation - An Essential Ingredient for the New Business Environment

The Apple iPod is perhaps the first great innovation of the 21st century – judging by the phenomenal global impact it has made.

It is no surprise, therefore, to see Apple at the top of the most influential rankings for innovation. In 2006, the company topped Business Week’s rankings of the 25 most innovative companies as well as Fortune’s Best in Innovation category in its annual survey of the world’s most admired companies.

Business Week said that to launch the iPod, “Apple used no fewer than seven types of innovation. They included networking; a novel agreement among music companies to sell their songs online; business model, songs sold for a dollar each online; and branding, how cool are those white ear buds and wires.”

And to lend support to the case that Apple is an eon ahead as an organization getting the innovation mix right, its latest gadget, the iPhone, is already a global hit – and it has not even been released yet.

A Goggle search of iPhone brings up a staggering 50 000 000 hits – and just the official announcement of its launch this year saw Apple shares soar. The BBC ran the headline on 10 January 2007: “Apple shares up on iPhone launch”, and detailed an 8% rise in the share price and that “shares in makers of smart phones fell on the news, with Research in Motion - the company behind Blackberry devices - tumbling nearly 8% on the Nasdaq.”

Globally it is dawning that innovation is now a key part of doing well in an increasingly challenging business environment.

IBM CEO Samuel Palmisano said to a group of 500 executives at a leadership forum held in Rome in 2006: “The way to thrive in this environment is by innovating – innovating in technologies, innovating in strategies, innovating in business models,” he said. Unlocking creativity is particularly pressing for old school businesses as it is widely acknowledged that innovation is a very key part of economic growth and job creation.

So how can companies respond appropriately?

Before any action can be taken business leaders need to take cognizance of how innovation is fostered. Leaders need to recognize that what lies at the heart of innovation is the mindset of the people within the business. Innovation begins with creative ideas, and creativity begins with people. For this chain reaction to occur, though, businesspeople need to adopt and foster a culture of strategic thinking and action.

According to research by Richard Florida, author of The Rise of the Creative Classes, a tolerant environment that values innovation and diversity is one of three enablers of creativity, which in turn, he shows, is a key driver of economic growth.

A “strategist” is often defined as those in leadership who make the big decisions for the business – nothing could be further from the truth. The reality is that people at all levels in organizations can develop themselves to be master strategists.

Achieving this has real benefits in a business environment – it enables people to see more viewpoints, alternatives, solutions, and opportunities for success, and therefore to make more informed decisions on what action will create value for the organization. It is through developing this mindset that creativity and innovation will be unleashed to the benefit of the business.

Research and experience from leading thinkers on developing innovative organizations highlight seven key questions which leaders can address in order lay the foundation for an innovation process:

1. Are blocks to innovation being removed and boundaries lifted which will allow people to experiment?
2. Are boundaries and limits being created too? Good creativity is based on discipline and has limits – whether its ethics or values, or time or money. It’s essential to have these in place.
3. Is the possibility of connections between people being enhanced, thereby allowing for increasing conversation and information flow? The fuel of creativity is rich connections between people and ideas.
4. Is anxiety being created in people? Not too much or it will be counter productive. But too little tension is counterproductive too. Some pressure, drive and urgency are important to keep people engaged and alert - enabling creativity is like making a tight rope, which must be tight to be useful. In organizations this means one needs both a force of experimentation, and a force of control and stability working in harmony.
5. Is there a willingness to let efficiency slip periodically to allow people to make the mistakes they must make to learn and understand? Creativity requires extra resources if it is to manifest as a great solution.
6. How is power being used? Creativity is a voluntary act – a leader can set the conditions for it to emerge but can’t dictate or order it to happen. Remember the sun and the wind who contested to get the coat off the back of the man walking up the road? The wind tried first and the harder it blew the tighter the man held on to his coat. The sun came out and shone warmly, and in no time the man took off the coat. Developing creative people is a bit like that – businesses have to create the right conditions for people’s creativity to emerge. Be too autocratic, criticize mistakes and try to be too directive and creativity will evaporate. Rather encourage, motivate and reward - and get out of the way. A leader may also need to bite his or her tongue sometimes and to smile if creativity is to advance.
7. Are new trends being addressed? Encourage people to be alert and alive to new trends and ideas early – put out information about innovations, and get in guest speakers about trends.

Many businesses aren't harnessing their assets properly. In order to harness innovation organizations must let go of the bureaucracy that cripples start-ups, and let go of some controls. Adopting network strategies and other methodologies is the begining. At the same time poor governance and corruption rip the heart out of innovation. Usually, these are symptoms of stakeholders maintaining, through circumvention, their control or relevance in a world where it no longer exists.

Florida in his book shows that there is a direct link between the attractiveness of a region for creative people and economic growth. A rich cultural life, high degrees of tolerance for different life styles, interesting environments – these are important

We need to loosen up a little as a nation and celebrate our creativity – it will pay off economically.