Innovation in business today Part II

Continued from yesterday:

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

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.

Innovation in business today Part I

Innovation in business today Part I

This is a series of articles I will post over the next few days which will help to cultivate innovation in the organisation, during these times it is important to maintain forward momentum with a lower burn rate, I hope these will help you to do just that.

By Dr. Earl R. Smith II DrSmith@Dr-Smith.com www.Dr-Smith.com

There is much talk of innovation and the challenges of how to stimulate and sustain it. It is one of the questions that transcend the stage of development of a company. It is also a question that should engage the entire team. Nothing affects the fortunes of an organization more than a team’s ability to come to terms and overcome the challenge of maintaining a culture of innovation. The world is simply to fluid and change such a dominate characteristic of the times we live in - innovation is necessary for survival.

Eventually all of my coaching engagements come to focus on the challenge of developing and maintaining a corporate culture that allows it to respond effectively to a rapidly evolving marketplace with a solid emphasis on creating value through innovation. The difficult aspect of this question is that it is very easy to discuss intellectually but implementation of any solution can prove very difficult. As a friend was fond of saying, “an understanding of innovation is, in itself, not innovative”.

Innovation is difficult because it necessitates the collaboration of two very different types of intellects. In order to develop such a culture, creative and the analytical types need to find a way to work effectively together. It is hard to overstate the difficulties that such an effort can encounter.

In my experience, the CEO and COO are two of the most important players in the effort to stimulate a culture of innovation. The third important player in the effort is the Chairman of the Board of Directors. It is this third player that is often overlooked - probably because in many companies the CEO also occupies the role of Chairman. That arrangement precludes an important dynamic - the role of the Board of Directors in the strategic evolution of corporate culture.

One of the principal reasons that this division of responsibilities is important is that most often the CEO and COO fall into the category of ‘analytical types’. Their focus is on essentially and appropriately on the tactical issues which revolve around the implementation of the company’s tactical plan. A strong Board lead by a visionary Chairman will act to counter this imbalance and contribute to the evolution of a culture of innovation. They will break the bottlenecks obstructing the flow of creative ideas.

A company must create a culture where all participants can challenge why something that does not make sense to them. They must be able to ‘think out of the box’. However, my experience has been that not all team members are able to do this effectively - in fact, it is critical that a substantial part of the team focus on thinking inside the box. This group provides the stability and institutional memory of the company - an essential contribution. Others will be better at thinking in new and revolutionary ways. They must come to terms with the importance of this stability and the need to preserve the organizational foundations while exploring and introducing new ways of thinking and operating.

The core issue in a culture of innovation is the relationship between these two groups. For it to function properly, there must be a high level of trust, an easy and direct pattern of communication and a freedom which allows each member of the team to focus their energies on being the best at what they do best.

I have worked with companies that were almost totally populated with ‘creative types’. Never has the term ‘herding cats’ seemed more appropriate. These organizations suffered from a kind of organizational attention deficit disorder. Good ideas were generated in abundance but the company lacked the infrastructure and team members that could turn them into revenue.

I have also worked with companies that were just the opposite - legions of ‘analytical types’. These companies developed a different form of stagnation. They might have been based on a ‘cutting edge’ technology at one time but quickly fell behind the competition.

Some of my engagements have brought me into the role of Chairman while others have found me serving as an advisor to either the Chairman or the CEO. However, in each case, the challenges have been the same - how does the company develop and maintain that essential culture of innovation? How does a company keep either of these types from achieving ascendancy and driving the other off the field? How a company answers these questions, more than any others, determines its future.