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Thursday, February 26, 2009

Innovation in business today Part II

Continued from yesterday:

By Dr. Earl R. Smith II

In the first part of this series, I outlined the importance of cultivating a culture of innovation and some of the major challenges that must be met. In this installment, I would like to focus on some of the practical issues that arise. The conflict that causes the most difficulty is between essentially two different perspectives - the ‘creative types’ and the ‘analytical types’. The effectiveness of any program designed to stimulate innovation turns on the ability of the senior management team and the board of directors to develop a culture within which these two very important perspectives can work productively together.

One of the most evident differences in these two perspectives is their attitude towards risk and uncertainty. The analytical types are generally risk-adverse and uncomfortable with high levels of uncertainty. Their inherent conservatism is an essential part of any corporate foundation. Without it, it is virtually impossible to build a large and sustainable organization. The creative types live in an environment of risk and uncertainty - in fact; they tend to thrive on it.

Teams of creative types tend to do their initial work best among peers - that is, among people who have the same relationship to risk and uncertainty. In this early stage, the analytical types just get in the way. However, at some point their efforts need the infusion of the analytical approach if for no other reason than to ‘ground’ their efforts in the reality of the company’s need to turn innovative ideas into revenue. Thus an important part of any innovative culture is the common realization that neither type has it all figured out - has all the answers. Creative types without the discipline and focus of the analytical types are merely running a ‘science project’. Analytical types without the non-linear thinking of the creative types are embarked on a journey that will end in obsolescence.

The combined skills of the senior management team and an effective chairman and board of directors is required to manage an effective mixing of what is normally oil and water. It is only under the egis of such a combination that such diverse talent can productively coexist and still feel comfortable enough to let their particular talents blossom. The strategic focus of the board and the tactical focus of the senior team meet in this partnership. The principal characteristic of this partnership - when it works well - is creative and innovative - it becomes a model for the combining of disparate perspectives in the company as a whole.

I have worked with companies to develop just such a partnership and some of my greatest successes have come from helping them get the mix just right. When the strategic vision of the board combines effectively with the tactical focus of management, great things begin to happen. The central players in this combination are the right CEO and the right Chairman. They are the ones who define the dynamics - open the possibilities. Creativity comes easier in the team environment where disparate types can operate effectively. So much more can be accomplished when persons from different disciplines and backgrounds exchange various ideas in the brainstorming process. The example that an effective partnership between management and the board provides becomes a template for the relationships between the analytical and creative types within the entire company.

A critical part of this relationship is a negotiated understanding of the process that turns innovative ideas into revenue. In the early stages, the creative types need to hold sway. Strategic thinking dominates. Management and the board need to manage the gradual transfer of this domination to the analytical types. As this happens, the composition of the team will change. The fundamental objective, after all, is to turn innovative ideas into new sources of revenues. The close working partnership between the Chairman and CEO is generally the critical factor. They are the two that must manage the process.

Cultivating innovation is not an intellectual exercise but a practical process that is based on a clear understanding of its nature. Companies that effectively and regularly innovate have mastered the challenges that come from bringing diverse talents into close proximity and facilitating their collaborative efforts in a way which takes maximum advantage of the strengths of all.

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