Monday, April 14, 2008

Why I Don't Read Innovation Business Books

Hardly a week goes by without the publication of a new business book on innovation. Most of these books purport to teach the art of innovation within your company. If only you follow the author's recipe, you can kick-start your company's innovation processes, accelerate growth, and reach some new level of creativity and productivity. Don't get me wrong, I think most of the authors of these books are quite sincere in their beliefs about their methods. But I take a contrarian point of view.

In fact, most companies of any size are not organized for innovation, they are organized for efficiency and profit growth. Innovation is a messy, expensive process with a low probability of being either efficient or profitable in the short run. Most of what the business books describe as innovation in companies is really about incremental improvement in existing products and processes. It is not hard to understand why existing companies resist innovation: it is not a good bet for their quarterly returns and in our economy, the quarterly earnings statement has become virtually the sole measure of the worth of a publicly traded company.

No, innovation processes are hard to teach to companies because they so rarely happen within an existing company. It is for good reason that most real innovations happen in academic research labs and start-up companies. The people who want to be in these places are the antithesis of the types of people you find in big companies. They hate bureaucracy. They want to do it their own way, even if it means they risk their very livelihood in moving an idea towards the market. These people would never describe themselves as reckless risk-takers but they have a much higher tolerance for ambiguity than their corporate counterparts. Moreover, they usually have a downright ornery streak of independence coupled to a high sense of self-confidence. Having to have every idea reviewed by multiple levels of management using conservative corporate processes is anathema to them. They know what they want to do and they just do it.

So is it possible to bring innovation to a large company? Yes, but it almost always has to be built into the DNA of the company from the start. I worked for 3M for 30 years. 3M is known for its innovation. That innovation came from a very organic business model. The core of the idea was to divide every business when it reached a certain size and let the parent division protect and nurture its offspring. This model had lots going for it. People who had an entrepreneurial streak could champion a new business and grow with it. The model was self-replicating: every division general manager was measured on the growth of the parent divisions AND the number of offspring created. The really innovative part of the equation was summed up in the corporate axiom that "technology belonged to the corporation and products belonged to the divisions". That meant that technology could be mixed and matched and recombined across all of the businesses to create new synergies that were not possible within any one division. Conversely, it meant that the divisions could jealously protect their products and markets as any small independent company would do.

This business model served 3M very well for its first 80 years. Finally, however, growth began to slow, the customers became confused by the multiple divisional sales forces that called upon them, global markets demanded more coordination, and competition in what use to be 3M's core markets made the going tougher. These forces began to be felt in the 1980's. Like most companies, 3M focused more on central planning and more on efficiency. The organic growth model gave way to a planned efficiency model. Not surprisingly, the makeup of the people in the company began to change. The entrepreneurs and risk-takers were harder to find. Some left the company, others went underground. Innovations still happen at 3M but the organic business model that was the core of the company has changed. Perhaps it had to given the scale and multi-national nature of the company.

So what would I put on a manager's reading list is they wanted to learn about innovation? I would suggest histories and biographies that portray how some of the great innovators of the past have done it. Check the reading list in the sidebar of this blog for some starting points. The most basic lesson may ultimately be that if you really believe you have a paradigm-changing idea, you will need to leave the safe haven of your current company. That is a scary proposition, especially in a recessionary economy. But going back to some of those earlier entrepreneurs, they won and lost fortunes, often several times over. Money was not their primary goal. Seeing their idea come to life was all that was important. Ask yourself, "What would Edison (insert your favorite innovator) do?" You might come away with some new ideas.

[Image of The Librarian, Giuseppe Arcimboldo (1566). From Wikipedia]

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