Tuesday, 2 June 2009

Building an Innovative Company Culture

Our friend, Paul Deeprose, at Career Gym sent us this. We thought we would pass it on!

March 11, 2009

How to . . . be innovative in the workplace

Make innovation a priority

1 “In this environment, innovation is a real challenge,” Penny de Valk, chief executive of the Institute of Leadership and Management, says. “We are seeing a number of organisations hunkering down.” Such behaviour is dangerous: companies that generate 80 per cent of their revenue from new products typically double their market capitalisation over a five-year period, she says.

Take risks and embrace failure

2 Ms de Valk defines innovation as “the successful exploitation of new ideas”. But to innovate requires many ideas that are unsuccessful. “You have to give people the freedom to fail and to fail fast,” she says. “That's a real challenge in a risk-averse culture.”

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Jaideep Prabhu, of the Judge Business School, Cambridge, says that the rule in pharmaceuticals — one in five molecules makes it to market — applies to other sectors. “Even then, one in three products is likely to fail after launch,” he says.

Eyes on the future

3 “Employees are so busy firefighting that they are blinkered,” Professor Prabhu says. “Step outside your situation and look to future opportunities and threats. Who will be your competitors and customers?” A study of internet banking in the United States looked at chief executives' letters to shareholders between 1991 and 1995. Those with the highest percentage of sentences about the future introduced new technology the fastest. “What made you successful in the past is not going to make you successful in the future,” Ms de Valk says.

Foster creativity at all levels

4 Jonathan Feinstein, of the Yale School of Management and author of The Nature of Creative Development, says: “Put yourself in the position where 'light-bulb moments' can happen. Give people freedom to define their creative interests and help to explore them.” Matt Brittin, the UK country director for Google, says that 20 per cent of employees' time is spent on individual projects. This practice enabled an engineer to notice that patterns in search terms could be used to track flu outbreaks. Ms de Valk says: “Don't just create a 'good ideas' culture, but decide which ones to put resources behind.”

Break the rules

5 Tamsin Davies, the head of innovation for Fallon, an advertising agency, says: “Think outside categories and be subversive. A clash of genres makes for different ideas. For the Cadbury's 'eyebrows' adverts we didn't think about chocolate but about 'what produces joy'.”

Collaborate across boundaries

6 Professor Feinstein says: “Get clients in a room with engineers or product managers.” Professor Prabhu advises getting divisions to compete: “Internal competition is a way of bringing the discipline of the market in-house.” Google involves users. Mr Brittin says: “Open-source software allows us to tap into a worldwide base of millions of software developers who help to improve the product.”

Think global

7 We are in a new “innovation world” where the US no longer dominates, John Kao, chairman of the Institute for Large Scale Innovation, writes in the Harvard Business Review. “High-tech start-ups can be 'born global' by availing themselves of talent, capital, R&D tax credits, regulatory relief and specialised facilities in such innovation hot-spots as Helsinki, Singapore and Shanghai.”

Act fast and keep refining

8 “We have a philosophy of trying to launch things early then get feedback,” Mr Brittin says. Although Google's search page may look the same, the company is constantly modifying its algorithms, he adds.

Cannibalise your own products

9 “Even when firms spot an opportunity, they may not seize it because it threatens the success of their own products and services,” Professor Prabhu says. Sony had the technical expertise to introduce MP3 players but was afraid of jeopardising the venerable Walkman, allowing Apple to get there first, he says, and Starbucks' venture into the instant-coffee market exemplifies a company turning cannibal.

Be ambitious

10 Innovation should focus on “making the competition irrelevant”, Ms de Valk says. She credits Cirque du Soleil, the acrobatic troupe, with reinventing the circus. Google never wanted to be “just a search engine” but to “organise the web”, allowing it to apply its technology broadly, Mr Brittin says.

World-beating innovators

1 Team Obama: turned an outside candidate into a “national brand”

2 Google: Search engine

3 Hulu: Video-streaming website

4 Apple: IT company

5 Cisco Systems: Designer and supplier of networking technology

6 Intel: Producer of silicon chip microprocessors for computers

7 Pure Digital Technologies: Makes simple digital camcorders

8 WuXi PharmaTech: A Chinese pharmaceutical research company

9 Amazon: Online shopping store

10 Ideo: Design consultancy

Source: Fortune, March 2009

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