Innovation: Who Cares?

Check out Lee Gomes’ “Portals” column in today’s Wall Street Journal: “Some ‘Breakthroughs' Deserve That Title – But Definitely Not All.”

Gotta love it.

I’ve been thinking a lot along similar lines lately in terms of innovation. Until the recent changing of the guard at Ford, it seemed as if everywhere I turned, I saw Bill Ford’s face in full page magazine ads and 30 second television spots touting Ford’s innovation culture (actually, Bill’s still popping up on the Ford Innovation web site), but take a look at Ford’s recent financial performance— it stinks!

Now, the folks at Ford will probably tell you that the campaign will pay off “in the long term,” but they’re wrong. These days consumers don’t care about what’s coming down the road. In their eyes, you’re only as good as your last product.

Consumers don’t care about what Ford is doing to benefit them five years from now, they’re interested in the cars they can buy today. In five years they’ll be ready to buy their next car, and you know what, if Ford has delivered innovative products, they’ll look at them then. But buying a Ford today doesn’t have a big influence on what consumers will buy five years from now — that brand loyalty thing is old school thinking.

Now don’t get me wrong, Ford’s done some amazing work with TRIZ and USIT in the past (and I’ll be among the first to applaud them for that!), but it seems to me that their latest “innovative” direction is veering them away from the structured innovation path and into the IBM and Intel world of, as Mr. Gomes calls it, “breakthrough inflation.”

What executives around the world don’t seem to understand is that consumers, whether retail or business, don’t care what you’re going to do for them in five or ten years. They care about what you’re going to do for them today, and maybe tomorrow. So for all the talk of innovation, keep it to yourself. It does not impress anyone outside your company. Treat it like your secret weapon and focus on actually producing innovations, not on promising that you will. Because until you get a grasp on what it takes to truly innovate, all you will produce is talk.

So what can CEOs do about it?

The first thing they need to do is to recognize that innovation is fast becoming a new science, and that it’s no longer considered an art. In order to create an innovative company, one needs to look beyond fostering a “creative environment,” beyond asking employees and customers for “ideas,” and instead they need to embrace the tools and methods that will enable innovation. Creativity is immensely valuable, but it’s unpredictable. Too much time is spent studying the one hit wonders, like AOL (well, they used to be studied), Atari (which developed the console video game system, but lost the war to Nintendo), Palm, and, at the moment, Google (which has yet to produce any new breakthrough innovations). Instead we need to study the repeat successes, like Procter & Gamble, Nike, and Apple and recognize that companies that have mastered repeatable innovation are actually methodical in their approach and not reliant upon any employee’s “eureka moment” in the shower.

The processes that P&G and Nike have implemented within their companies that make innovation part of their day-to-day activities, and the environment that Apple fosters to encourages innovative thinking at every step and every level pays off in how fast they all bring new and groundbreaking products to market while laying out the roadmap for their future products.

Sustaining 4-6% organic growth year over year is very challenging for a company like Procter & Gamble with annual revenue of 70 billion dollars. Achieving 4 billion dollars of organic growth through innovation with the help of its 7,500 researchers in the internal R&D department is no longer sustainable. Instead P&G has created a process to connect their innovation opportunities with 1.5 million contact persons who are part of many networks. Their researchers are able to formulate problems, seek solutions by circulating them through their global networks, and bring solutions to fruition faster and cheaper by leveraging P&G’s manufacturing, marketing and research capabilities. Today, 35% of their new products were originated from outside, up from 15% in 2000. Thus P&G has managed to sustain growth by using repeatable processes.

Generating innovation and growth by applying repeatable processes techniques (such as TILMAG, Ethnography, Archetype Research, and Biomimicry (also known as Biomimetics)) is a formula being embraced by more and more companies these days. Nike, among others, is using Biomimicry to study nature’s most successful developments and then imitating these designs and processes to solve human problems and create paradigm busting solutions.

Like most things throughout history, today’s business leaders are looking for the silver bullet; they’re impatient; and they just don’t want to deal with the intellectual challenges of really driving meaningful and lasting change. The few that do will be the companies that will thrive in the future and few of them will be the companies that thrive today.

During the age of the dotcom, we saw an army of internet startups with innovative ideas race forward, but it has only been the ones who continued to innovate that survived.

The idea of innovating for the future may make a good soundbite, but unless your company is putting new and truly innovative products into the consumer’s hands today, you are best off not talking about what you hope to be able to do down the road, but worry about what you can do now.

In the words of Nike, “Just do it.”