The No.1 innovation mistake businesses make that bleeds them dry
ILLUSTRATION BY RACHEL REVILLA
In Germany, we have a saying that goes, Hochmut kommt vor dem Fall. This means that overconfidence and arrogance lead to failure. This is why I teach my Fortune 500 CEOs, family business and entrepreneur clients that it is wise to have a healthy sense of paranoia about what you might be missing when you are at the top. It insulates you against overconfidence, ignorance or arrogance, which usually precedes a fall.
Most companies, even the market leaders, are just one or two major strategic decisions away from complete failure. Paranoia is a healthy habit to cultivate.
Innovation is not a linear process
As a “global management guru,” as Bloomberg has called me, and as the owner of a worldwide strategy and management consulting group, I see day and day out that innovation is one of the most misunderstood concepts in companies. Some countries handle it better than others, Israel for example or the United States, but overall, most companies still get it wrong.
I was talking to one of the family members of one of the wealthiest Southeast Asian family business conglomerates that is now in its fifth generation. When we discussed innovation, it became clear that she had an understanding that was superior to most business executives because she not only had a business background but also an artistic one.
Innovation is not a linear process. You cannot put a 10-point plan together, press the button and out comes great innovation. It just does not work like that. The control freak has to leave the room! The secret is to create the right environment for great innovation. Then you need to step back and let the magic happen. With patience and trust, you will reap the rewards over time.
The best ideas rarely come from the top
That includes the boardroom. This is why you need to make sure you give everyone a voice that can be heard. And here lies one of the biggest mistakes companies make: They innovate when it’s too late, or they innovate in an isolated part of the organization, or they innovate once or twice a year when they run special events such as “innovation drives,” etc.
While these are in principle good ideas and certainly better than nothing, they fail to produce the breakthrough ideas and groundbreaking innovation that can set the business permanently apart from the competition. For innovation to work and produce great results, it has to be a constant in your organization.
Remember: You want to be where no one else is. You want to be in a world of your own. You want to dominate your market like a monopoly because that will give you a license to print money.
How you do anything is how you do everything
As Aristotle said: “We are what we repeatedly do. Excellence then is not an act. It’s a habit.” And so innovation must be a habit for it to produce the kind of excellent results that put your business into that world of its own.
This is why you have to set up innovation structures, systems and channels that run through your organization like a red thread, like concrete beams through a skyscraper.
You should have two obsessions:
1. To understand the hearts and minds of your customers
2. To see reality as truthfully as possible
Innovation will help you to do both. How? Well, first of all, the more you empower your front-liners, the ones closest to your customers—to make their voices heard and suggest ideas for improvements, possible new customer or market trends, or anything that needs tweaking or fixing—the more you will understand the hearts and the minds of your customers. If you are at the top of your business, start with the assumption that you do not know a zit about what drives your customers. Unless you are like Steve Jobs. And most of us, sadly, are not.
Assume you are not Steve Jobs and cannot predict what customers want before they know they want it. Then assume you really have no idea what drives your customers, and certainly less of an idea what will drive them tomorrow. If you have that humble attitude of knowing that you don’t know, you are already ahead of 99 percent of your competitors—because the biggest and most common flaw in boardrooms is the overestimation of their competence.
Be humble
Know that you do not know. The doorman in a luxury hotel knows much more about the hearts and minds of the clients than the general manager (GM), simply because the doorman spends a lot more time with the clients than the GM ever will. In the same way, you have to listen to your front-liners more than to the board if you want to know what drives your customers and therefore what products or services they will need tomorrow.
Corporate history is full of anecdotes of famous failures that are directly linked to the boardroom ivory tower arrogance and ignorance. Don’t make that same mistake. You are smarter than that. Listen to the ones who know. Empower your front-liners to have a voice. Trust them more than the fancy market research studies you pay so much money for and that are usually not worth more than the paper they are printed on.
Your people are your greatest asset. Use them.
Truth is the essential foundation for producing good outcomes
In all my writings, I keep stressing that the most important job of a business leader is to see reality as clearly as possible. Why? Because most businesses are just one or two major strategic decisions away from breakthrough success or monumental failure. And as a business leader, you need to make the best strategic decisions. You can only do that if you have clarity about what the reality of your business is like. If you set up the right innovation structures and systems and you make that a constant practice in your organization (think “long term” not “events”), then you will get a steady and constant stream of ideas, data and insights from all ranks in your organization.
This will empower you to see reality as clearly as possible. As icing on the cake, it will also empower you to detect trends and be ahead of your competition because you will have your ears close to the ground.
Practice till you can’t get it wrong
What made Arnold Schwarzenegger win the Mr. Universe title seven times is the same principle that builds the world’s most innovative companies: repetition, repetition, repetition. This is why the companies that practice an “ad-hoc” or “stop and go” approach to innovation never truly succeed with innovation in any meaningful way.
How you do anything is how you do everything. This means that you need to make innovation a habit; otherwise, you will not succeed. It has to become second nature so you get this constant stream of data and insights and new ideas over years and years.
Remember: You cannot control the economy, politics or other external factors. The only thing you have 100-percent control over is your productivity: your own, that of your people and the productivity of your organization. Innovation plays a fundamental part in that. Master innovation and you will master productivity! INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email [email protected].
