The electives are picking up speed and I have now completed a 4-day long set of lectures with Professor Vangelis Souitaris. The professor has some pretty radical views on how to foster innovation within a company:
- Hire slow learners of the organisational code
- Hire people who make you feel uncomfortable, even those who you dislike.
- Encourage people to ignore and defy superiors and peers
- Do not lead (and stifle) innovation by punishing and expelling people who do not do what they are told.
- Find some happy, optimistic people and get them to fight. Happy optimists have beliefs worth fighting for, and the resulting struggle leads to better ideas.
- Reward success and failure
- Punish procrastination.
- Decide to do something that will probably fail and then convince yourself and those around you that success is certain.
- Do not try to reduce the number of flops, it drives out innovation. A high failure rate is the hallmark of innovation.
This list looks like the ingredients for a corporate nightmare. How on earth can you set the compass, plan for plain sailing and then entertain mutiny? But you can see what the Professor was getting at here.
Within an organisation, it is quite common to get a management briefing asking all for innovation, at the same time as reminding everyone of their continuing responsibility in identifying and eradicating inefficiencies: one part – take risk; one part – eliminate errors. These are hardly comfortable bedfellows – risk increases variation, does it not?
The kneejerk response seems to be that a well-judged balance is needed. But surely such a balance compromises both ambitions.
Industries that are reliant on innovation will often divide (spin off) and grow their fledgling innovations (e.g. pharma R&D labs), much as 3M has done so famously as part of its Renewal model. Or even more current, the trend for ‘built to suit’ corporate venture capital (CVC) is not just about bringing in outside inspiration, it is also about entertaining a model that recreates the entrepreneurship of young disruptive enterprise, while managing some of the downside risk (e.g. Cisco will often incorporate put options).
Of course, spin offs and CVC are innovative in themselves, so what about those companies that accept that they need to swim, but want to put their toe in the water first. Well, at the very least there needs to be some acknowledgement that incremental innovations need to be treated differently to R&D around new growth platforms that add significant chunks of revenue and profit.
But a company would need to be very ambidextrous to support such streams simultaneously. If appetite for risk is a key differential, the partition will need to be structural. Not only will the efforts need the same ambidextrous management to ensure investment accountability and coordination, but also the units themselves will need to receive different styles of management, metrics and incentives.