By: Jeneanne Rae
In his new book Relentless Innovation, prolific innovation author Jeffrey Phillips looks at innovation from an enterprise-level perspective, encouraging companies to adopt an innovation capability that can be scaled and repeated throughout the firm, rather than attempt the one-off innovation initiatives that are common to big businesses today.
Unlike most other books on innovation that strictly focus on ways to identify innovation opportunities or learn from successful innovators, Relentless Innovation acknowledges the fact that not every company can simply apply Apple or P&G’s innovation tools and processes and achieve similar results. Instead, Phillips, who is the lead consultant at OVO Innovation, identifies the two most significant barriers that limit most companies’ innovation efforts: middle management and business-as-usual.
He uses case studies from best-in-class market exemplars to illustrate how to overcome the barriers to innovation and create an environment of “innovation as usual;” however, rather than promote specific innovation tools or processes that organizations should employ, Phillips presents solutions that are at times broad generalizations more so than actionable recommendations.
What is relentless innovation, and why is it important?
Phillips defines relentless innovators as firms that balance investments in efficiency and innovation, and consistently introduce market-making products and services that delight customers. He writes that becoming a relentless innovator can drive not only revenue growth and profits, but also employee engagement and market leadership. Financial metrics testify to the market value premiums that are commanded by relentless innovators, who optimize their operating models by finding a balance between efficiency and innovation.
Phillips maintains that achieving the title of relentless innovator is the result of finding the balance in investing in efficiency and innovation, although the exact route to such a balanced act is more of an art than an exact science.
What kills innovation in most organizations?
After debunking some of the misconceptions and myths around innovation practices, Phillips discusses the real obstacles to innovation: business-as-usual and middle management.
Business-as-usual is the idea that the culture, processes, expectations, goals, and strategies of a firm are dictated by the need to produce consistent quarterly results to placate shareholder demands. Innovation projects or mandates are almost always in direct opposition to, and thus hindered by, business-as-usual practices, which generally do not readily allow for corporate risk-taking.
This operating model is reinforced and executed by middle management—people tasked with achieving these consistent financial results. Phillips does not blame middle management specifically for killing innovation, but rather the organizational system that emphasizes the need for consistency, cost cutting, and efficiency. Middle management, he argues, is merely the messenger charged with executing the business-as-usual operating model.
Many attempts at embedding innovation within organizations have fallen flat for several reasons, including poorly communicated strategy, lack of resources, fear of uncertainty and/or risk, and the demands for quarterly results. Perversely, innovation “tools” such as Six Sigma and Lean have perpetuated the business-as-usual cycle, rather than opening up firms to embracing innovation as a capability.
Additionally, running innovation projects is not seen as a desirable task, as business-as-usual incentivizes efficiency and discourages failure; projects that are inherently risky are therefore avoided, and promising managers are not likely to seek out such potentially “career killing” projects.
Ultimately, Philips argues that the barriers to innovation will actually become the accelerators to innovation, once the operating model effectively addresses and communicates the goals, culture, and processes required to shift towards an “innovation-as-usual” mentality. Middle managers must be tasked with executing innovation as usual, but they cannot do so until there is a firm wide adoption of clearly articulated innovation strategy.
Why innovation strategies tend to fall flat
As much, if not more, can be learned from the failure of companies to innovate as from the best-in-class exemplars of relentless innovators. In particular, the role of executives in building a workable innovation capability cannot be overlooked. Relentless Innovation discusses the various ways in which executives become uncomfortable “walking the talk,” such as how unpalatable it is to invest today’s budgeted dollars for uncertain returns that are potentially years down the road. Phillips points out the intrinsic conflicting dichotomy within some organizations when executives task middle managers with creating innovative new products and services—with the caveat of not upsetting the status quo.
In many instances of failure, there is a clear desire for innovation, but no defined vision or strategy that can be communicated to the middle managers who are ultimately responsible for its strategic execution. When executives and managers are not clearly aligned to the innovation strategy, significantly less time and effort will be spent ensuring that the work is carried out.
Building a framework for innovation-as-usual
After investigating why many firms fail to successfully innovate, Phillips explores how to create an “innovation-as-usual” approach. The goal, he argues, is to create an operating model that embraces innovation through a combination of culture, attitude, frameworks, and processes. Exploring cases from relentless innovators, he identifies eight factors that allowed those firms to create an innovation business-as-usual framework:
- Innovation metrics tied to specific strategic goals
- Enabling functions
- “Who” is managed, as opposed to “what”
- Defined innovation processes
- Reactive versus proactive philosophy
- Human resources (specifically recruitment, retraining, and rewards)
Companies that address these factors can overturn the business-as-usual mindset and replace it with an innovation-as-usual operating model. When there is a top-down and systemic approach to innovation, the factors that were previously barriers to innovation initiatives become the enablers of an innovation capability. Once the strategy has been laid out, middle managers will find the tools to execute innovation, and create the processes necessary to make certain that it is the “new normal.”
Finding the balance between efficiency and innovation
Shifting the focus of a firm’s operating model away from efficiency and towards innovation is a significant challenge and affront to business-as-usual, but because innovation is a strategic choice based on existing capabilities, it is a difficulty that can be surmounted.
Perhaps the most important takeaways from Relentless Innovation are the key factors that Phillips posits as integral to shifting towards an innovation-as-usual operating model. He advocates for a top-down focus on innovation that is reinforced by goals, which can be consistently measured. Middle managers can contribute to the effort by embracing innovation tools, techniques and methods. Additionally, innovation must be regarded as a revenue opportunity, not as a cost structure. Firm-wide factors that he puts forth include adopting a rapid experimentation methodology, learning patience, and publicly airing innovation initiatives in order to force a “no turning back” moment.
Phillips uses GE as a case study in the shift from business-as-usual to innovation-as-usual practices, but the air is let out the sails when he confesses that “the results to date for GE have been mixed”—not exactly the most inspirational way to motivate readers to begin a company transformation! Regardless, his points remain valid even if the path to a balance between efficiency and innovation is not perfectly delineated.
Phillips recognizes chronic problems facing innovation and offers practical frameworks for innovation-as-usual operating models, but unfortunately there are few detailed case studies to point out how or why each element is brought to life. Innovation “torchbearers” such as Apple, Google, and P&G are discussed, but not necessarily in the context of the proposed model.
The underlying insights and observations are logical and readers should take note, but they would be strengthened by tangible examples from market leaders in order to feel more actionable than philosophical. A suggestion of a “road map” towards success could also be helpful for those currently experiencing pain in the area of making innovation a systemic capability.
At times, Relentless Innovation seems to focus too much on the problems of innovation initiatives rather than on the solutions, but Philips’s point is strong and abundantly clear: innovation should become a firm-wide capability, rather than a one-off project. And in terms of the idea that building a credible new innovation capability is imperative to maintaining relevancy and leadership, Relentless Innovation is worth its weight in gold, not only for the C-suite, but also for the hard-working middle managers upon whose backs innovation ultimately rests.
By Jeneanne Rae
Jeneanne Rae is the CEO of Motiv Strategies and an internationally recognized thought leader on innovation management and design strategy. She was hailed as one of BusinessWeek’s “Magnificent Seven Gurus of Innovation” in its cover story on the creative corporation. After receiving an MBA from Harvard Business School, Rae spent 20 years mastering the art and science of innovation through senior management positions at Peer Insight and IDEO. For 10 years, she taught new product and service development as an adjunct professor at Georgetown University’s McDonough School of Business. She currently teaches executive education through various top-ranked programs. Rae can be contacted at [email protected].