11th October 2017
Traditionally, innovation has been driven by top management. The typical scenario is that managers meet and after some debating they come up with the strategic goals for the company. This in turn also determines which areas the company will focus on for innovation.
This top-down approach puts innovation in a department often separately from the rest of the organization. This deed usually brings a series of unwanted consequences that hinder the generation of more and better ideas:
- It limits the creativity of the people who form the organization and a large amount of creative capital is wasted.
- It can generate tunnel vision among those in charge of managing innovation, such that everything happening outside the areas of interest goes unnoticed.
- It is not possible to enrich ideas by levering diversity across disciplines and points of view existing within the company.
As a result, more and more companies are trying to make innovation work for all their employees. This is how decentralization of innovation occurs and the company can focus on a greater number of ideas. This scenario passes on to R&D areas projects that have a strong technical or scientific component, usually with high levels of risk and with timeframes spread over several years.
For product and service development, opening up innovation to all people across the company, for instance, it gives the sales team the chance to come up with umpteen ideas as they are constantly interacting with customers. This is also true for industrial companies.
Let’s have a look at the example of Keyence Corporation, a Japanese company specializing in industrial automation devices such as electronic sensors. They claim that twenty-five percent of the devices sold each year are new products. The new product ideas are driven by the sales team who have to devote part of their time to observing their clients’ production lines in order to understand the type of problems they face.
While customer-driven innovation is very important, many employees do not interact directly with customers. For example, this is the case for people who are in the HR department. Does that mean that these people have nothing to offer in terms of innovation?
In my opinion, the answer is a resounding no. These people observe problems and have ideas about their field of activity. Many of these ideas can help the company become more competitive and can lead to better processes when it comes to delivering services to the internal customer, for example through a novel talent retention programme.
It is important to emphasize that it is never an idea or a technology that differentiates an innovative company from an ordinary company. What makes innovative companies different are the people who work there. That’s why companies must look for ways to make the most of all their human capital and their people’s ability to generate a continuous flow of ideas, only the most promising of which can be implemented.
In order to build suitable environments for ideas to flow, evolve and be shared, the company must make sure that its people have a sense of belonging to it and feel that their ideas are important for strengthening the company’s competitiveness.
You may be thinking that all this is really fabulous, but that in certain mature sectors distanced from the end-customer this sounds like pies in the sky. If so, you may be surprised to know that one of the most innovative companies in Brazil is dedicated to making steel cans. That is to say, it competes in a mature market and despite that, it has managed to create a creative environment where innovation is something everyone does.
Brasilata, the name of this company, calls their employees, inventors and makes them sign an “innovator’s contract” by which employees commit to share any idea that contributes to creating better products, processes, and to reducing costs. So we can see that it isn’t necessary to be in a technology or consumer goods sector to create a culture in which ideas flow.
However, this approach implies that the people in the organization must have time to devote to the generation, evolution or implementation of ideas. For this reason, one of the things I usually do in my projects is to generate ideas to free up time, or to identify activities that generate little value and may be reconsidered.
An example of this is “pfizerworks”, which allows Pfizer employees to outsource routine tasks such as creating PowerPoint presentations or analyzing basic data. This simple action has enabled more than 65,000 hours to be freed up for concentrating on tasks with greater added value.
Decentralizing innovation and making it something becomes the responsibility of everyone in the company can offer great benefits. However, it poses a series of organizational challenges that should not be underestimated. Companies that manage to build these types of environments will have a head start for overcoming the competitive challenges of the VUCA world in which we live.