Rita Gunther McGrath is the author of ‘The End of
Competitive Advantage’ and an associate professor of management at the Columbia
Business School. She talks about how
‘invention’ is often confused with ‘innovation’ and suggests that not everyone
in an organisation should have innovation as their agenda anyway. Only people
who are very good at it, should be doing it.
So what is the reward for these innovative mavericks?
Surprisingly, many companies don’t reward them. This is simply because organisations don’t
reward people for just coming up with a great idea unless they want to run it.
Her experience has been that, people with this kind of talent don’t usually
want to be bogged down by mundane bureaucratic ways of running what they start.
She explains in a Strategy& video, that people are very
taken by stories of Thomas Edison (and others of his ilk) and his continual
fine-tuning of an idea until he got the light bulb just right. But she prefers
Scott Anthony’s definition instead, which is “Innovation is something new that
creates value.” He is the Managing Partner of Innosight – a pedigree firm with
a stellar roster of innovation experts on their payroll. So he should know what
he’s talking about, and we should pay attention to what he says.
This “something” could cover a lot of ground. It could be
business models, system processes or new products all together. She feels
“companies limit themselves unnecessarily by taking such a narrow view (of
innovation).”
It is exactly because of this that companies are struggling
to innovate. She said “there is a mismatch, where we talk about innovation but
actually do other things.” A bunch of factors play along simultaneously as
well. For instance, the economy could be acting up. She explained how a
colleague of hers, did a study years ago, where she found that about 11% of the
economy was in rapid growth and about an equal number was in a rapid decline. So
in the final analysis, in this time-frame, very few leaders of large
organisations would have had any experience in being in a “high growth
innovative environment” themselves.
Rita said, “First, they don’t have much experience doing
innovation. Second thing is that to do innovation, you have to operate in what
I call a high assumption-to-knowledge ratio world. And that requires making a
lot of assumptions, which human beings are not very good at making. So what
most executives miss is the need to shift the way that they lead and manage
from a low assumption world to a high assumption world. And it has a completely
different internal logic to it. Making this shift is problematic for people. “
Then there are the usual suspects like not having enough
funding, resources, governance structure and qualified people. She has seen
people use the same tired practices being used with everything, whether it’s
pitching for a $5000 prototype or $500,000 plant extension.
Breaking the mould in every way, is the best way to begin
innovating.
