You are seeing this message because your web browser does not support basic web standards. Find out more about why this message is appearing and what you can do to make your experience on this site better.


Home | Sign In | Contact Us | Careers | Site Map | Help


Advertisement

Making Innovation Everyone's Job

Excerpted from "The Future of Management," by Gary Hamel with Bill Breen.

In a world where strategy life cycles are shrinking, innovation is the only way a company can renew its lease on success. It’s also the only way it can survive in a world of bare-knuckle competition.

In decades past, many companies were insulated from the fierce winds of Schumpeterian competition. Regulatory barriers, patent protection, distribution monopolies, disempowered customers, proprietary standards, scale advantages, import protection, and capital hurdles were bulwarks that protected industry incumbents from the margin-crushing impact of Darwinian competition. Today, many of these fortifications are collapsing:

• Deregulation and trade liberalization are reducing the barriers to entry in industries as diverse as banking, air transport, and telecommunications.

• The power of the Web means upstarts no longer have to build a global infrastructure to reach a worldwide market. This has allowed companies like Google, eBay, and MySpace to scale their businesses freakishly fast.

• The disintegration of large companies, via de-verticalization and outsourcing, has also helped new entrants. In turning over more and more of their activities to third-party contractors, incumbents have created thousands of “arms suppliers” that are willing to sell their services to anyone. By tapping into this global supplier base of designers, brand consultants, and contract manufacturers, new entrants can emerge from the womb nearly full-grown.

• Incumbents must also contend with a growing horde of ultra-low-cost competitors—companies like Huawei, the Chinese telecom equipment maker that pays its engineers a starting salary of just $8,500 per year. Not all cut-price competition comes from China and India. Ikea, Zara, Ryanair, and AirAsia are just a few of the companies that have radically reinvented industry cost structures.

• Web-empowered customers are also hammering down margins. Before the Internet, most consumers couldn’t be sure whether they were getting the best deal on their home mortgage, credit card debt, or auto loan. This lack of enlightenment buttressed margins. But consumers are becoming less ignorant by the day. One U.K. Web site encourages customers to enter the details of their most-used credit cards, including current balances, and then shows them exactly how much they will save by switching to a card with better payment terms.

• In addition, the Internet is zeroing-out transaction costs. The commissions earned by market makers of all kinds—dealers, brokers, and agents—are falling off a cliff, or soon will be.

• Distribution monopolies—another source of friction—are under attack. Unlike the publishers of newspapers and magazines, bloggers don’t need a physical distribution network to reach their readers. Similarly, new bands don’t have to kiss up to record company reps when they can build a fan base via social networking sites like MySpace.

Collapsing entry barriers, hyperefficient competitors, customer power—these forces will be squeezing margins for years to come. In this harsh new world, every company will be faced with a stark choice: either set the fires of innovation ablaze, or be ready to scrape out a mean existence in a world where seabed labor costs (Chinese prisoners, anyone?) are the only difference between making money and going bust.

Given this, it’s surprising that so few companies have made innovation everyone’s job. For the most part, innovation is still relegated to organizational ghettos—it is still the responsibility of dedicated units like new product development and R&D, where creative types are kept safely out of the way of those who have to “run the business.”

Today innovation is the buzzword du jour, but there’s still a yawning chasm between rhetoric and reality. If you doubt this, seek out a few entry-level employees and ask them the following questions:

1. How have you been equipped to be a business innovator? What training have you received? What tools have you been supplied with?

2. Do you have access to an innovation coach or mentor? Is there an innovation expert in your unit who will help you develop your breakout idea?

3. How easy is it for you to get access to experimental funding? How long would it take you to get a few thousand dollars in seed money? How many levels of bureaucracy would you have to go through?

4. Is innovation a formal part of your job description? Does your compensation depend in part on your innovation performance?

5. Do your company’s management processes—budgeting, planning, staffing, etc.—support your work as an innovator or hinder it?

Don’t be surprised if these questions provoke little more than furrowed brows and quizzical looks. Truth is, there are not more than a handful of companies on the planet that have, like Whirlpool, built an all-encompassing, corporatewide innovation system.

Visit the Gary Hamel home page

Comments

Right you are Gary.
As Don Sheelan stressed " Innovation is the lifeblood of any organisation. Without it, not only is there no growth, but inevitably, a slow death".
Even those who look ahead, focus on 'technological innovations' only.
No encouragement is given to 'right-brain' thinking, in managerial practices. It is time that awareness is heightened, in this area.
What do you feel.

- Posted by tony fernandes
November 27, 2007 5:38 AM

Dear Prof. Hamel,

Innovate or perish. That seems to be the slogan for organizations today.

The first problem in extending innovation throughout an organization is the scope of innovation as it is normally understood. Most organizations tend to look at innovation from a product or feature perspective. In the process, innovations in service, innovations along the supply chain, innovations in management practice, innovations in attitudues - all tend to get short shift.

As an example, a technology company has put up on its intranet the perceptions of different stakeholders, and most importantly of peer groups and direct reports, on everyone from the CEO downwards, for all to see. In a sense, this could be very disturbing to many managers and yet, one can also look at it as a great HR innovation. How many organizations would be willing to do this?

The second problem is the artificial system boundaries created due to functional division. This inevitably leads to a we vs they syndrome and a lose-lose situation for the organization. As a corollary, if innovation has to be an organization-wide phenomenon, and if it is accepted that great ideas can emanate from anyone, anytime, anywhere, shouldn't we seriously consider breaking down the functional barriers, and turn management into a holistic discipline that always focuses on the "big picture" rather than what is good for a function, a SBU, a product line or a geographic region?

Warm regards

- Posted by B V Krishnamurthy
November 28, 2007 11:35 PM

Gary,

I told off the professor on the final exam of an elective management coures ar RPI in 1954. Being innovative and otherwise disruptive by nature, I didn't expect anyone to hire me; so I had to invent something to sell. This led to a business and the resultant damn management.

Along about 1981, I met Bill Gore at a fluoropolymer conference in New Orleans and learned about his lattice organization. When I asked him how to convert to a lattice, he told me there was no way that he knew of. This led to my providing him with an annual progress report until he died.

My business has grown to over 200 people without being able to fully convert. I could go into detail on the obstacles, but I keep trying. Halfway thru your book this week, I woke up with an idea!

I met with a small group og production people and explained that I wanted three of them to set up a team to make products - from beginning to end, instead of how eache of them had had a part, but never anything like this. They decided to call themselves "Team Beta". This is going to work.

Let me know if you would like to follow the progress.
What would you charge for 200 books?

Bill Neuberg
Shamrock Technologies Inc
Tel (1) 973-286-4889
Mobile (1) 732-616-7001
EMail bneuberg@shamrocktechnologies.com
Web www.shamrocktechnologies.com

- Posted by Bill Neuberg
November 30, 2007 10:38 AM

Speaking of innovation, perhaps it would be interesting to also ask the following questions to any person working at any level in an organization:

1. What motivates you to go to work everyday?

2. When was the last time you proposed a new idea to your superiors? How was that idea received?

3. If you could run the company by yourself for a day, what changes would you make and why?

4. If you could take a sabbatical from work, what would you do and why?

5. If you could work for any company of your choice, which one would it be and why?

6. If you could create your own business, what would it be and how would you run it?

Raj Bose
Faculty - University of Phoenix

- Posted by Raj Bose
January 5, 2008 6:24 PM

Dear Sir,

Since ideation is central to innovation, it has an eventual relationship with how people connect with coworkers, customers and publics in general that may impact generation of ideas, resultant value, and process of innovation. Innovation has thus evolved in varying patterns from the age of Colonial Bazaars (when value was derived essentially through economies of scale and efficiency in distribution) to today's way of finding value in conducting business through electronic gadgets. In recent times, eCommerce, eBusiness, and now Socail (online) Networks and Web 2.0.,each have been influencing how innovation would happen. Numerous value chain disruptions due to these patterns would stand in proof. Companies must equip to recognize and learn to ride these waves to stay as innovation leaders.

One way to achieve this is by managing Knowledge Management (KM) program on the lines of social networks, but to stay within the limits of corporate framework for secrecy and security regulations.

Other ideas/efforts that may also help:

Making corporate buzzword and/or internal branding strategies linked to innovation.

Exclusive emphasis emails to each employee asking " what have you innovated this month ?"

A neutral catylyst group that will conduct mandatory innovation meetings/calls to pick up ideas and spherehead innovation.

Performance metrics with more weighted rewards for innovation, and not so tightly linked to numbers and routine processes.

Mandatory course (like Ethics) on innovation to drive its significance for sustainance, growth and well-being.

Regards,

Venugopal Chepur

- Posted by Anonymous
January 13, 2008 3:45 PM


Dear Sir,

Since ideation is central to innovation, it has an eventual relationship with how people connect with coworkers, customers and publics in general that may impact generation of ideas, resultant value, and process of innovation. Innovation has thus evolved in varying patterns from the age of Colonial Bazaars (when value was derived essentially through economies of scale and efficiency in distribution) to today's way of finding value in conducting business through electronic gadgets. In recent times, eCommerce, eBusiness, and now Socail (online) Networks and Web 2.0.,each have been influencing how innovation would happen. Numerous value chain disruptions due to these patterns would stand in proof. Companies must equip to recognize and learn to ride these waves to stay as innovation leaders.

One way to achieve this is by managing Knowledge Management (KM) program on the lines of social networks, but to stay within the limits of corporate framework for secrecy and security regulations.

Other ideas/efforts that may also help:

Making corporate buzzword and/or internal branding strategies linked to innovation.

Exclusive emphasis emails to each employee asking " what have you innovated this month ?"

A neutral catylyst group that will conduct mandatory innovation meetings/calls to pick up ideas and spherehead innovation.

Performance metrics with more weighted rewards for innovation, and not so tightly linked to numbers and routine processes.

Mandatory course (like Ethics) on innovation to drive its significance for sustainance, growth and well-being.

Regards,

Venugopal Chepur

- Posted by Venbugopal Chepur
January 14, 2008 9:35 AM

Dear Sir,

Since ideation is central to innovation, it has an eventual relationship with how people connect with coworkers, customers and publics in general that may impact generation of ideas, resultant value, and process of innovation. Innovation has thus evolved in varying patterns from the age of Colonial Bazaars (when value was derived essentially through economies of scale and efficiency in distribution) to today's way of finding value in conducting business through electronic gadgets. In recent times, eCommerce, eBusiness, and now Socail (online) Networks and Web 2.0.,each have been influencing how innovation would happen. Numerous value chain disruptions due to these patterns would stand in proof. Companies must equip to recognize and learn to ride these waves to stay as innovation leaders.

One way to achieve this is by managing Knowledge Management (KM) program on the lines of social networks, but to stay within the limits of corporate framework for secrecy and security regulations.

Other ideas/efforts that may also help:

Making corporate buzzword and/or internal branding strategies linked to innovation.

Exclusive emphasis emails to each employee asking " what have you innovated this month ?"

A neutral catylyst group that will conduct mandatory innovation meetings/calls to pick up ideas and spherehead innovation.

Performance metrics with more weighted rewards for innovation, and not so tightly linked to numbers and routine processes.

Mandatory course (like Ethics) on innovation to drive its significance for sustainance, growth and well-being.

Regards,

Venugopal Chepur

- Posted by Venugopal Chepur
January 14, 2008 9:37 AM

I think the number of individual innovators is already on the rise dramatically and will be widely dispersed on a global scale.

The goals, scope and uniqueness of problems these innovators will begin to address will also likely be on a global scale.

It will be interesting to see if these innovators can gain relatively speedy and low-barrier access to:
(a) channel partners (with larger companies, OEMs etc.,)
(b) finance - to sufficiently prototype their innovative ideas
(c) marketing - to promote their ideas to their target audiences

Some type of 'innovator's exchange' will truly propel widespread innovation in both purposeful and new directions.


- Posted by Arun Simha
January 30, 2008 4:53 PM

Hi ,

my company got a problem , we need to expand our business , we are outsourcing service provider , our growth depends on our client's industry. Thus we had lot constraints when it comes to innovation ,primarily you can classify them into two which is internal i.e. our resources and capabilities and external i.e. our client business growth and its driving factors. with these limitations , how could we innovate for growth , our boundary conditions are predefined. can't this limit the intensity of innovation. i would appreciate if someone could share their views on this.

- Posted by Thirulogachander
January 31, 2008 12:00 AM

Making Innovation Everyone's Job
Making Innovation Everyone's Job
Dear Professor.
The time I was in one of the audit company, the partner gave me one good tip to work smoothly. He said,” Firoz, I am the partner because I have audit managers, tax manager under me, and they are audit managers and tax managers as they have the audit supervisors, seniors, juniors, trainees, secretary, office messengers, under them. Remove them and I would be typing the draft balance sheet that I did, audited, tax prepared, reconciled, despatched, mailed and that is on month on the electronic typewriter. We did not the computer those days.
I am signing the balance sheets every day as I changing as I grow and I make sure all of you are changed by giving you the training, leave , education, on line , in house training etc.
Sir. Remove change. I sat in the same stagnant water and shrivel up to die.
I thank you
Firozali A Mulla MBA PhD
P.O.Box 421
Dar-Es-Salaam
Tanzania
East Africa

- Posted by Firozali A Mulla MBA PhD
February 3, 2008 7:58 PM

Dear Hamel, Today, for the companies are radical innovatons and creative managers. With reference to management requires new, agile, revolutionary, dynamic and high performance organization. Thus, firms takes more yield and the highest worker satisfaction.
Sincerely.

- Posted by Hüseyin YILMAZ
February 13, 2008 9:11 AM

In the quest to unlock innovation in organizations, it may be beneficial or even mandatory to learn how to unlock the internal children in our employees.

I'm sure we can all remember as children being told "don't" do this or you "can't" do that, and the result growing up was to reinforce the idea that there is one "right" way to do anything. It has also led to the creation of a national psychosis of believing that many actions that would create positive change are too difficult to try.

How else would you explain the decline in electoral participation or in labor union membership? The majority of our nation believes that their ideas and their voice are too small to make things better. If it weren't for those "crazy" entrepreneurs, our country would not continue to grow and dominate new markets.

So how could we create a whole nation of entrepreneurial thinking (or at least a whole organization)?

Well, by reducing the prevalence of "don't" and "can't" in our organizational vocabulary, and replacing it with "how" and "when". Here is how it works:

Currently we might say things like:

"Don't be silly. We can't build a spaceship that will go faster than the speed of light."

When if we seek to innovate, we must say:

"How could we build something to travel faster than the speed of light? We can improve upon current methods of propulsion when we achieve the following advances to build upon:"

We must also always ask:

"How could we approach this in a different way?"

This problem of believing there is only one "right" way is compounded by our organization's inherent intolerance for risk and the accompanying preference to identify reasons not to do something or not to fund an effort. There are lots of ways to overcome this negative management reinforcement, but that is a topic for another day.

For now, we must stop treating employees like children and instead help them unlock and channel their inner child to uncover new "right" ways. Are you ready to democratize innovation?

- Posted by Braden Kelley (blogginginnovation.com)
February 21, 2008 8:06 PM

Gary, this is an ongoing problem in many businesses especially in the industry that I work which is Air Traffic Control. My role is Innovation Manager and while we encourage innovation we have to rely on good quality linear thinking as well for obvious reasons.

Recently I saw that you were running a workshop in the Area of Innovation for ATCA (Hope I got the organisation right) and unfortunately I could not access the "Virtual Conference" at the time .

I would really love to get any insights that you may have when working for an organisation that has to be on one hand risk averse and on the other innovative to grow? I would also like to know if I could access the information that came out of the ATC Innovation conference.

Many Thanks
Robert Miller
Innovation Manager
Airways Corporation of New Zealand
www.airways.co.nz

- Posted by Robert Miller
March 27, 2008 4:45 PM

In Silcon Valley one of the hallmarks of good engineers is that
they are the ones who own their own test equipment. It's been no secret and those who pushed the technology curve do so at relative easy. So the transition from hey why should I put with this employer to I can do it better the jump is small.
Innovation starts with a playful character and the time to do it.
But in most companies they tend to drive by fear rather than an openess.

- Posted by dale kurita
June 11, 2008 2:36 AM

I really enjoyed this article that demonstrates how to mix business with innovation. I have shared it with my readers on the Northstar Thinktank site:

http://www.northstarthinktank.com/business/business_cycle/growth_execution/making_innovation_everyone_s_job.html

Thanks, and keep up the good work!

- Posted by Jeff Chavez
July 3, 2008 3:17 PM

It worth to read the article as this explains the way we should go to go-on and on

- Posted by Syed Waqar Ahmad
August 7, 2008 7:39 AM

In the world of unpredictablity,be it a man or woman , glass cliff exists only where inefficacy thrives alongwith incompetence. Howsoever well trained or well equipped the person be, for lasting results innovative quotient, dash of serendipity and intuitive intelligences matter.

- Posted by bhuvana
August 23, 2008 2:48 AM

Trackbacks

TrackBack URL for this entry:
http://discussionleader.hbsp.com/cgi-bin/mt/mt-tb.cgi/593

No trackbacks have been made to this entry.

Return to Gary Hamel

Join The Discussion

* Required Fields




Verification (needed to reduce spam):

Return to Gary Hamel


Posting Guidelines

We hope the conversations that take place on HarvardBusiness.org will be energetic, constructive, free-wheeling, and provocative. To make sure we all stay on-topic, all posts will be reviewed by our editors and may be edited for clarity, length, and relevance.

We ask that you adhere to the following guidelines.

  1. No selling of products or services. Let's keep this an ad-free zone.
  2. No ad hominem attacks. These are conversations in which we debate ideas. Criticize ideas, not the people behind them.
  3. No multimedia. If you want us to know about outside sources, please point to them, Don't paste them in.
We look forward to including your voices on the site - and learning from you in the process.

The editors


Stay Connected

RSS Feeds
Email Newsletters
Twitter: @HarvardBiz
YouTube
Podcasts on iTunes
Harvard Business Mobile

About Gary Hamel

Gary HamelGary Hamel is Visiting Professor of Strategic and International Management at the London Business School; cofounder of Strategos, an international consulting company; and director of the Management Innovation Lab. He is the author of Leading the Revolution and coauthor of Competing for the Future, two landmark books that have appeared on every management best seller list. He has also written numerous articles for Harvard Business Review, the Wall Street Journal, the Financial Times, and many other business publications. Hamel lives in Northern California. For more, you can also visit garyhamel.com.

Related Content