What Is Innovation?
By: Leland Barnecut

The Latin root of innovation is novus, meaning new. Innovation means “bringing into effect new and more effective products, services, or approaches.” Continuous innovation allows companies to adapt to constantly changing conditions—both positive and negative. It makes companies more resilient and cost effective. Breakthrough innovations make headlines, but in fact successful organizations value incremental innovation as well. In order to stay in synch with the times, they must develop new markets, products, and services; find ancillary uses for existing products; latch on to new economic trends; and grow or streamline operations as needed.

That said, companies have to strike a balance between innovation on one hand and order/organization on the other. Innovation to a company is like cell renewal in the human body. Without it there is stagnation and death, so it is absolutely vital. On the other hand, no company can stand unrestrained innovation. There has to be some degree of order, organization, and control or costs will go wild and chaos will reign. Profitability demands efficiency, and efficiency demands repetition, which can put short-term profits at odds with the longer-term growth provided by innovation.

Whether the natural tension between innovation and order turns into paralyzing conflict or creative interplay really depends on how the company is led. Each company needs to find its own balance between life-giving innovation and life-sustaining organization.

So all companies need to be innovative at some level?

Yes! I don’t want to torture the metaphor, but a company really is like a living organism. It has to renew itself to adapt to changing conditions. Most of the big companies that we now see as pillars of stability were founded on innovative ideas and have had innovative shifts of direction along the way. A lot of other companies that were giants in their day failed to adapt effectively and are history.

Why is innovative thinking important under current conditions?

Innovation helps companies to:

• Find creative ways of keeping the same level of service without using the same level of resources.
  
  
• Retain top performers. People get a sense of satisfaction from creating something new (breakthrough) or making something better (incremental). I personally stayed with a company six years longer than I had planned because of the variety of projects I had there and the level of creativity my management encouraged.
  
  
• Enhance teambuilding efforts. Teamwork and innovation go hand-in-hand. Where you have innovation, you almost always find cross-functional and specialist teams working to carry it out. I would also support the notion that a truly team-based organization is more likely to foster an innovative environment.

Today, are companies giving more weight to their stable side in order to make stakeholders, employees, and customers feel more secure?

These are obviously unusual times and leaders can’t be faulted for feeling anxious. Companies will have reactions to stress as varied as individuals have. Some are paralyzed by the slightest threat; I have seen companies doing things akin to applying the brakes to a car that is already stopped, as if that will somehow help. Others are naturally agile or are shaken out of their complacency, and they take advantage of the turmoil to try something new. Overall, I sense a kind of uneasy optimism right now, as if the nascent economic recovery is like wet cement that we hope will dry soon before too much graffiti gets scrawled into it.

What can a company do to foster innovation?

Some people are always innovative and some people never are. Most people are somewhere in the middle. I firmly believe that those in the middle take their cues from the overall environment and their immediate leaders. Companies and their leaders need to send a clear message that innovation is valued, refrain from micromanaging employees (because nothing kills the urge to innovate faster), and give employees recognition for their ideas. Since innovation is never a sure-fire thing, some level of failure must be tolerated.

That is the dilemma. Our business world is results oriented, but much of the experimentation that eventually leads to successful innovation is unsuccessful; there’s a lot of “failure” involved in success. Companies that understand that are more likely to give innovators the time, resources, and political support they need to produce something new and better. Companies that are impatient or superficial in their support of innovation remind me of the Chinese proverb about the farmer who felt that his crops were growing too slowly so he decided to help them along by pulling on the roots.

What is the task of an innovative leader?

Independent of whether the leadership of a company openly supports innovation or transmits signals against change, I think that individual people experience the same ambivalence toward innovation that organizations experience. People are often skeptical of new things at the same time that they are excited by them. The job of the innovator is to minimize the perception of risk on the one hand and maximize the perception of benefit on the other. Perception of risk is minimized by helping others see that change is not necessarily loss. Risk is also minimized by familiarizing people with the change so that it is not seen as so strange after all. It takes a lot of communicating, and successful innovators are usually great lobbyists in their organizations.

Increasing perception of benefit involves helping the individual constituencies affected by the innovation to see how their goals will be met by its implementation. It is about answering the question “what’s in it for me – or others?”

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For more information, please contact Joan Caruso, Managing Director of Organizational Effectiveness Consulting at The Ayers Group — (212) 889-7788.

Leland Barnecut is an Ayers Group consultant. He has consulted in innovation since 1985 and has worked with clients in over 20 industries around the world. He is a former Senior Vice President at D’Arcy Advertising (DMB&B), Managing Director at PricewaterhouseCoopers LLP, and Partner of Harbridge House, Inc.