The Future of Management, Creativity And Innovation

"We're now living in a world where it's innovation that creates wealth," says Gary Hamel, founder of the consultancy Strategos and a visiting professor at the London Business School.

Hamel suggests revamping every management concept -- from how employees use their time to how funding is allocated to projects so that managers may inspire workers, identify the most promising business ideas and marshal the resources to execute them in his new book: The Future of Management

IT organizations will play a critical role in two ways:

first, by building systems that companies will use internally to facilitate innovation and

second, by identifying how companies can use new technologies to upend established business models and deliver new products and services.

"The Internet is doing exactly what management is supposed to do. It's amplifying and aggregating human capabilities. It's democratizing the tools of creativity, from digital cameras to blogs to the ability to do mash-ups. The Net is also surprisingly good at aggregating human capability. Linux is the fastest evolving piece of software that human beings have ever created.

The three big challenges for companies over the next generation are going to be: Adaptability -- how you build things that can transform themselves. Innovation -- how you mobilize the imagination of every single person in your organization. Engagement -- how you create organizations that are so engaging emotionally and intellectually that people want to bring their capabilities to work. What's the most adaptable innovative and engaging thing on the planet? The Internet.

Think about the insights that people need to be innovative, the insights they need into customers, into technology, into competitors."

Hamel talks about the "Hierarchy of innovation".

At the bottom is operational innovation, the kinds of things that companies do to run leaner or be quicker or deliver 24/7 customer service.

A step up from that is product innovation that delivers the next wonderful flat-screen television.

A level up from that you have business model innovation. Dell, at one time, was a business model innovator.

And a level up from that you have what I'd call architectural innovation. This is when you get a whole industry thinking differently -- what Apple did with iTunes to get all these music companies to agree to a new digital rights management system.

At the top you have management innovation. All of my research suggests that it's management innovation that has created the most enduring source of competitive advantage.

"If I were a CEO, the first question I'd ask in every budget meeting and in every review meeting with my CIO would be what percentage of our total budget and time is going into projects that will allow us to do something unique in our industry"

Where does Innovation come from?

Number one, innovation comes from challenging industry dogma.

Number two is understanding the early warning signs of big shifts in demographics, technology, regulation or whatever it may be that most of the industry simply isn't paying attention to.

The third kind of personal competence you need to innovate is a deep empathy with the hidden or unarticulated needs of your customers.

I think the last competence as an innovator you need today is you can't think about your company in terms of what it makes and what it does. You have to think of it in terms of what it owns and what it knows -- its strategic assets.

Bottomline:

Hamel is on the money when it comes to driving creativity and innovation at today's business. The key insight is management driving innovation or at most times coming in the way. According to Hamel, it is really upto the management to create the processes that unblock creativity and innovation, enable ways to find innovation, and execute. How can companies really mobilize the imagination of every single person in the organization and create lasting wealth? To find out more, first read his interview below, and then the book.

References:

Can't innovate? Blame management

q&a Leading business strategy expert Gary Hamel talks to us about what it takes to get ahead in today's enterprise environment. It turns out we're consistently solving the same problems while ignoring the bigger ones around the corner
by Elana Varon

Creating Team Innovation - Chapter Two - Examples of Effective Teams

In Creating Team Innovation – Chapter One, the characteristics of a high performance team that led to consistent Team Innovation was presented. Before I jump into how to create high performance teams, I would like to provide quick illustrations of three such teams.

Chapter Two – Examples of Effective Teams provides best practices of effective teams in various organizations, looks under the hood on what made these teams effective, and exposes areas in which these teams could have done better.

What are some examples of effective teams in an organization of which you have either been a member or a leader?

What made it an effective team? What could the team have done better?

Example One

Team:
12 Department heads and 175 employees in a Golf & Spa Resort.

Team Goal:
Business turnaround.

Team Achievement:
The team managed to turnaround a resort that was losing significant money to a hotel that actually began producing profits.

What made it an effective team?
1. One of the major factors that turned the hotel around financially was that the management focused on having the right people in the right jobs.
2. The hotel management focused on selecting (both management and hourly staffed) the right talent, setting the expectations, and defining the right outcomes.
3. Over time, the hotel ended up with a group that embodied the term “team work”.

What could have been done better?
Give everyone a fair opportunity to prove themselves (after giving the tools and training necessary to be successful). However, once you have determined that it is not going to work out, you cannot wait too long to deal with poor performers. Not dealing with those issues will create frustration amongst those that are performing well.

Example Two

Team:
Kitchen crew at a restaurant.

Team Goal:
Product Innovation.

Team Achievement:
It was the most highly creative and fun group, that created great camaraderie and spirit in the kitchen that led to new innovations in food and service.

What made it an effective team?
1. A spirit of creative freedom was fostered by everyone, from the top down. Even though it was a very busy kitchen, there was always time to work on a pet project or to create a new dish or daily special.
2. For the most part, people were able to put aside their egos. It was very common to work on a dish, and to have someone come over and give his input, and then another person would come over and contribute his two cents. After awhile, a great new dish would emerge, which usually had little resemblance to the original thought - but was a collaboration of creative effort. Everyone would look at it with pride.
3. People were publicly praised and recognized for a job well done
4. There was a common passion and enthusiasm for what we were doing. The owners seemed to be very good at attracting and recruiting this type of employees.
5. The standards and expectations were always being raised. There was no room for complacency.

What could have been done better?

Many individuals eventually left and opened their own restaurants in the area.
Ownership was at times unreasonable, did not tolerate or forget mistakes.
The kitchen atmosphere took on an "us against them" mentality, which ironically brought the kitchen crew members together.

Example Three

Team:
Process Quality team consisting of over ten managers from sales, service, product and infrastructure organizations.

Team Goal:
Process Innovation.
The goal of this team was to surface any quality issues that the sales or service team experiences with the currently released or soon to be released products. If the issues required follow-up, the product and infrastructure managers provided a detailed follow-up analysis. If the quality issues required immediate resolution, the product and infrastructure managers will escalate these issues to executive management until they are resolved.

Team Achievement:
The team was effective in generating timely feedback and follow-up on quality issues.
A detailed log of quality issues was generated after each meeting, and the product or infrastructure managers were required to follow up on these issues via email and before the next meeting. A new meeting will go over any outstanding issues, and then dive into the new issues.

What made it an effective team?
1. The team goals were clearly defined.
2. The team deeply cared about product and service quality, and customer satisfaction.
3. There was active participation, frequent communication and collaboration among the team members and management.
4. The product and infrastructure managers followed through on the quality issues, and resolved them in a timely manner.
5. The team took pride and enjoyed the moments when the quality issues were resolved.

What could have been done better?
When there was a change in senior management (a new VP took over products), his position on the activity and escalation of issues by this team changed. Thus, when issues were escalated, they were not resolved, ignored, or even challenged. Ultimately, the sales and service team who were giving their pro-active feedback began realizing the lack of follow-through from the product and infrastructure teams (owing to the change in guard). Hence, the team was eventually dissolved. Later on, the new VP realized this mistake, and created a new team to handle this.

Lessons learned:
What are the incentives for a new manager to re-invent existing processes?
Cost saving, the recognition from upper management, the recognition from clients, make an impact on existing processes by making them more efficient, cheaper or faster, to show that the experience they bring can take the company to the next level, better align processes to the company goals & objectives.

These are just a few examples from various segments of the industry on how effective teams deliver and execute, and innovate with creativity.

Creating Team Innovation - Chapter Three will examine forming such a well-functioning high performance team.

If you enjoyed reading this Innovation best practice, I recommend the complete list of Creativity Innovation Best Practices.

References:

eCornell

China and India driving Innovation

Chinese Vice Premier Zeng Peiyan, in a key address at the 14th World Productivity Congress (WPC) held in Shenyang, capital of northeast China's Liaoning Province, emphasized the role of technology and innovation in China towards developing productivity and realizing sustainable development.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Zeng proposed that in order to "realize sustainable development, China should institute an advanced system of productivity which considers new technology industries as the pioneers, basic and manufacturing industries as supporting players, all of which will help the service sector develop to its fullest". Zeng even called for implementing the strategy of reinvigorating the country through science, education and trained personnel and building a system of innovation. Zeng proclaimed that such innovative systems will "ensure scientific development which help transform the mode of economic growth to achieve harmonious and sustainable development." Zeng also wants to reduce pollution and energy consumption so as to create a safer and cleaner environment for productivity to thrive.

The China drive towards innovation and productivity is consistent with Friedman's assessment in "The World is Flat."

In a separate news story, The Confederation of Indian Industry (CII) is planning to create a National Innovation Grid in India. CII in a partnership with Centre for Entrepreneurial Learning (CFEL) of Cambridge University is proposing to set up a virtual network of information to drive innovation in Indian Small and Medium Enterprises (SMEs). The National Innovation Grid would act as a facilitator and driver for SMEs who can leverage the knowledge gained from CFEL and infrastructure capital from CII to create innovative new businesses. This has the potential to accelerate growth in the Indian SMEs.

"CII`s alliance with East of England International, a hi-tech cluster with Cambridge is focused at developing a model for linking small entrepreneurs and individual innovators with linking academia, research and development institutions, businesses as well as the government to facilitate innovation in the SME sector in India", CII President R Seshasayee said.

CII also launched a new program: "Towards 100 Indian `Billion $' MNCs" in partnership with Infosys. The program has a lofty goal of helping 100 new Indian Multi-National Companies achieve One Billion Dollars in revenue within the next ten years through an "ecosystem" of partners.

Bottomline

China and India are driving Innovation to develop productivity, create sustainable development, and achieve new business growth. Both countries are realizing the strategic importance of Innovation as they seek to create new economic growth in the future. New technology industries, SMEs and even Billion Dollar MNCs are on the horizon.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

References:
Xinhua online
Zee News
Hindu

Education driving Innovation in The World Is Flat

In his bestseller, "The World Is Flat", Thomas L. Friedman elaborates on the role of our style of Education driving Innovation.

Bill Gates View

Specifically, when Friedman asked Bill Gates, the Founder of Microsoft, about the the "supposed American Education advantage - an education that stresses creativity, not rote learning", Gates dismissed this entirely. Gates believes that it is a sad mistake for the (American) people to think that the rote-learning systems of China and Japan can't turn out Innovation. Gates even goes on to say "Who has the most creative video games in the world? Japan! I never met those 'rote people' ...Some of my best software developers are Japanese."

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Race to the Top

Friedman stresses that "Young Chinese, Indians, and Poles are not racing us to the bottom. They are racing us to the top." Further, Friedman claims that they want to dominate the world "by creating the companies of the future, ones that people all over the world will admire and clamor to work for." He gives an example of a Chinese American who was working for Microsoft, and accompanied Gates on visits to China. According to him, Gates is the equivalent of the modern rock star in China. The young people in China would do anything to hear Gates speak, including scalping tickets. Jerry Yang, the co-founder of Yahoo!, is also in the same category.

And then Friedman makes a statement that reverberates with a loud echo (and bass) throughout the entire book:

"In China today, Bill Gates is Britney Spears. In America today, Britney Spears is Britney Spears - and that is our problem"

Indeed.

Our Production

According to most statistics, the number of foreign graduate students in the U.S. colleges in Sciences, Mathematics and Engineering are greater than 60%, in some cases even more than 90%. Most graduate students are from Asia. We are not producing the high number of Scientists, Mathematicians and the Engineers of the future, as we used to throughout the Twentieth century, to create future Innovations. It appears that the world is producing more intellectual talent, and will continue to produce more in the immediate future - and the irony is that the world is coming to the U.S. colleges to learn to become Innovative.

Growth of Education in China

Friedman observes that China today is becoming increasingly confident of their K-12 education system, of their fundamental strengths in Math and Sciences, and the Chinese youth are getting ready to "unleash their creative, innovative juices." Wu Qidi, China's vice minister of education, believes that nurturing more "creative thinking and entrepreneurship are the exact issues we are putting attention to today." Education overhaul is undergoing a massive movement in China. Large number of scholars, teachers and professors who have been educated in America and Europe are returning and are imparting changes to the classrooms and learning in China - even Arts is now getting taught. China believes that Education will pave the road to the future. And China has the roots of inventions dating back to the compass, papermaking, printing and gunpowder to back this claim. It is just a matter of time. And according to Gates, the Microsoft Research Asia based in Beijing has become the most productive research arm in the Microsoft system "in terms of the quality of ideas that they are turning out. It is mind-blowing."

Questions, Questions

These raises some important questions about the future of Education and Innovation here in the U.S.:

Do we need to change our Education system to compete versus the world, and create more Innovation in the future?

How do we create more Scientists, Mathematicians and Engineers today and in the future?

Do we believe that we can simply "outsource" the intellectual talent from abroad and create the type of Innovation that we have been known for?

In thirty years, which Innovative companies in the world will be in the Top 100 list?

There are no easy answers to any of these questions as our policy makers will ascertain.

But at least this much is certain: The role of Education, and in particular, Sciences, Mathematics and Engineering, is fundamental to Innovation. And the more Scientists, Mathematicians and Engineers we produce, the more Innovation we can expect in the future.

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Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Acknowledgement:

Thomas L. Friedman, "The World Is Flat"

Ten Percent of Sales from Innovation

Here's a great story that appeared in Ireland's Top Business Site, Business World.

According to the Irish Industrial Policy Body Forfas, "Firms in Ireland reckon that 10 percent of their turnover (sales) is due to product innovation."

This is a great testimony to the role of Creativity and Innovation in Business.

"A total of 34.6 Billion Euro was estimated to be a result of product innovation between 2002 and 2004," says Forfas. "This amounted to 10.1 percent of total turnover (sales) in 2004."

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Forfas further revealed that:
"29.1 Billion Euro of this came from firms in the industrial sector, and 5.5 Billion Euro from the services sector."

Industrial sector is big on innovation since it contributed 17.1 percent of its sales from Innovation, whereas the Services sector of the business only contributed 3.1 percent of the sales owing to Innovation.

This further validates the successful role that Innovation and Creativity plays towards topline sales growth.

Forfas further claims that 52.2 percent of all businesses were "Innovation Active", meaning that some portion of their sales resulted from successful product innovation.

What were the top issues that blocked or compromised innovation?

Companies surveyed indicated "lack of funds, high costs of innovation and lack of skills." This could mean that some companies are either not profitable, have minimum profits or perhaps losing money that they are not able to fund innovation. Or some companies have done their homework and believe the cost of innovating is considerable, and perhaps detrimental to their current growth plans. Finally, companies may not have sufficient creative talent that can help fuel the innovation.

Forfas defined Innovation quite broadly to include R and D, engineering development work, purchases of machinery, software acquisition, purchases of external knowledge and training, and design and marketing - essentially new development or new investments that fueled new growth.

Forfas rightfully claims that "The percent of total turnover from new-to-market product innovations is an indicator of creativity and novelty across the economy." Indeed.

What percent of your sales are contributed by Innovation? Is it more than ten percent? Do you even track your sales to Innovation? And what hinders Innovation at your company?

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

For the complete story, please click here.