Five Tips for CEOs on Innovation
An absolute ocean of ink has been spilled about innovation but--to save you countless hours of reading--I'm going to boil the best insights I've gleamed from years of reporting on the subject:
- Create a company-wide culture where innovation is worshipped. Everyone should feel they can be involved in innovation, whether it is creating new products, new business processes or even new management techniques, as Gary Hamel suggests in his new book on The Future of Management. Simple tactics include bonuses and ceremonies, not to mention promotion possibilities.
- The CEO's role varies substantially. Sometimes it is the CEO who has the vision from 35,000 feet up in the air and then gets the organization to follow that path. But other times it is mid-level or lower-level person in direct contact with the customer. If that happens, the CEO has to be wise enough to embrace the ideas and not demand that he or she (the CEO) be the only person who had bright ideas.
- Sometimes you have to break the rules. A lot of companies have formal innovation processes where ideas are put through a gauntlet or series of checkpoints. Some ideas fail, others make it. These techniques are very well developed at IBM, Corning, Medtronic and other companies I've studied. But sometimes, you have to break the established innovation processes. That's how Motorola came up with the Razr (although they failed to keep the innovations coming.) The guys who came up with the Razr did so secretly and totally outside the traditional innovation process.
- A corollary of what I've said above is that innovation should not be limited to an innovation or R&D department. If the whole organization doesn't have an investment in embracing new ideas, the innovators will fall flat. They can't innovate in isolation.
- One of the most powerful things a CEO does to spur innovation is the allocation of capital. If there are multiple established businesses inside a company, the heads of each of those businesses is going to fight like hell for resources. If a new baby comes along--say Saturn at General Motors--the established business heads are going to fight against any of their budget going to the upstart. Yet, a CEO often must take dollars away from yesterday's businesses and give them to emerging and untested ones. That takes guts.