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Saturday, November 01, 2014

'Invention is often confused with innovation'

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.

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