Seems like everyone is talking about innovation these days.
Most of the discussion centers on the need to add value to customers through innovative products and services. But according to Gary Hamel, a leading expert on business strategy, there’s more to innovation than just bringing new products to market.
In a recent Harvard Business Review article entitled, “The Management 2.0 Challenge: How Will YOU Reinvent Management in Your Organization?” Hamel identifies five different levels of innovation, including (from least to most important):
Operational innovation includes incremental or sudden improvements in areas like supply chains or customer support systems. Easy to emulate, these innovations rarely generate any lasting competitive advantages.
Product innovation comes from new product and service offerings. The best of these redefine how customers relate to the product. Most just add new bells or whistles for moderate increases in perceived value.
Strategy innovation reshapes business models by reinventing how value gets delivered to customers in a market or industry.
Ecosystem innovation revolutionizes entire industries. For example, the ability to download music (especially single songs as opposed to entire albums) has reshaped the music industry.
Management innovation reinvents the way we manage ourselves and our companies. Clearly the most challenging, it also produces the most formidable competitive advantage.
In his article, Hamel addresses management innovation primarily from a structural standpoint. He recommends that companies eliminate the traditional management hierarchy and move to small, flexible teams that organize people around ideas they are passionate about.
I agree that today’s markets require nimble organizational structures that allow people to respond quickly to sudden market changes. I also think we need to address the process side of management as well. Specifically, we need to reinvent how we gather and analyze information, how we make decisions, and how we think about our customers, our markets and the world in general.
What do we need to do differently?
Stop looking only at information that aligns with your view of the world.
Typically, management looks primarily at industry information from their own sector. Who are our competitors? What are they doing that we need to pay attention to? What changes are happening in our industry? But in today’s world, the competitor that puts us out of business often comes from outside our industry.
Make it a habit to seek out information beyond your normal boundaries. Subscribe to one or two magazines that have nothing to do with your business or industry. Visit web sites and watch news programs with different political views than yours. One of my favorite web sites is www.ted.com, which contains short video clips from thought leaders in a wide variety of unrelated areas.
To ensure a constant flow of diverse information, constantly review your processes for seeking out new data. Ask: What sources of information beyond the walls of our industry do we regularly scan? Who is looking at these sources and how often? What are we learning from this outside information? How could it apply to our business, our customers, or our markets?
Review your decision-making processes in real time.
Don’t wait until after making a major decision or launching a new product to analyze your decision-making progress. Instead, review decisions in real time by making your thinking processes visible to others.
Before making a major decision, publicly state, “Here’s my thinking on this issue and here’s what leads me to think this way.” Then provide more detail for the reasoning behind your assumptions. For example, “Based on our previous experience in this area, I assumed these elements would remain the same but those would change….” Then explain the consequences or outcomes of your thinking. “I came to this conclusion because….and here’s what it means to this team.”
Invite others to expose their thinking as well. When everyone identifies the assumptions behind their thinking, you’ll be amazed at how people can see the same data and come up with very different conclusions.
Finally, review the team process for reaching the decision. Ask: Did we thoroughly consider the issue or did we rush to consensus? Did the CEO or team leader unduly influence the decision? Were alternative points of view encouraged or shut down? Is there more than one “right” answer to this problem? What have we overlooked in our discussion?
Constantly challenge your thought bubbles.
Thought bubbles are the little voices inside our heads that tell us the world must be a certain way. They’re the unconscious assumptions we make about our customers, our industry and our business that we know to be true because “they’ve always been that way.” The problem is most of our assumptions stopped “being that way” a long time ago. Unless we examine them on a regular basis, we end up making key strategic decisions based on a world that may no longer exist.
Ask: What has changed with our customers, our markets, our industry within the past six months to a year? What assumptions are we continuing to make simply because we “know them to be true”? When was the last time we did something in this organization that went completely against the status quo?
Challenging our thought bubbles takes persistence because our brains tend to see what we already believe. We look for patterns of information that support what we think is right, and we actively screen out data that contradicts our view of the world.
To overcome this tendency to see only what we expect to see, have a “non-expert” research your fundamental truths. For example, have your CFO look at customer data. Have your sales manager look at purchasing practices. Or have your marketing VP look at operations.
Today’s world moves unbelievably fast. By the time we get a new product or service to market, someone else has already figured out how to top it.
To gain a sustainable competitive advantage, we need to innovate management itself. We need to become more self-aware of what we do and how we do it — and then continually improve that process.
Are you up to the challenge?
Holly G. Green is author of “More Than A Minute,” and the CEO and Managing Director of The Human Factor, Inc. She has more than 20 years of executive level and operations experience in FORTUNE 100, entrepreneurial, and management consulting organizations. She was previously President of The Ken Blanchard Companies, a global consulting and training organization as well as LumMed, Inc. a biotech start up. For more information, visit her at http://www.thehumanfactor.biz and http://www.morethanaminute.com