everyone at the company,
everything, everywhere,
and that goes on non-stop.
Innovation permeates Rubbermaid.40 Some time ago the
management team visited the British Museum in London. They left the building with a bunch of new ideas for kitchen products. Apparently, the ancient Egyptians knew things we have forgotten. Rubbermaid pillaged the ancient past with pride and considerable gusto. If Rubbermaid can do it, so can you. Innovation is rewarded in every industry.
Innovation is not only a matter of technology – nuts and bolts. In fact, technology is often only a small part of it. Innovation concerns every little aspect of how an organization operates – administrative innovations, mar- keting innovations, financial innovations, design innovations, HRM innovations and service concept innovations. Going for total innovation, therefore, requires rethinking every little aspect of how we operate. This means reinventing strategy, increasing speed and thriving on smartness. But above all, total innovation requires ignoring and listening to the customers, as well as promoting internal heterogeneity and homogeneity – moving from a world of focusing on either or to one of achieving both, simultaneously. We are not talking about striking a balance – Funky Inc. combines extremes rather than settling for average solutions.
Innovate through reinventing strategy
In a world where technology, institutions and values are in a state of turmoil, innovation is about rethinking what we are doing and about reinventing our industry. The US com- pany Taco Bell, part of Pepsi Co., sells “tex-mex” junk food. At one time, the company firmly believed that it was a player in the fast food industry, and that the key to success was to increase market share, particularly in relation to other tex-mex restaurants. Reviewing the strategy, manage- ment realized that Taco Bell was really in the business of
feeding people.41The more challenging goal was to go for an
increased share of stomach. In one second, the size of the market exploded from $70 billion to $550 billion. In five years, sales more than doubled. How? Well, if you are in the business of feeding people you better go out looking for the customers, rather than just expecting them to find you. So, Taco Bell set up small, often portable restaurants at schools, hospitals, train stations, airports, libraries and other such places.
During the last few years, we have seen companies such as Dell, Amazon.com, Nike, and Starbucks doing the same thing. They change the rules of the game. The uniqueness of these firms often rests with the soft and intangible aspects of their customer offerings rather than technology. Nike shifted its focus from being a shoe company to being a sports company. And then it shifted the focus from sports products as such to sporting performance and the superstars of sports. While most people don’t talk about the charac- teristics of a particular basketball shoe or a golf putter, many are willing to dissect the performances of Michael Jordan or Tiger Woods from every angle.
Howard Schultz, “the espresso evangelist”, and Starbucks took on the Herculean task of educating the American consumer about the fine coffees of the world. Contrary to what many would have expected, the company turned out anything but a modern age Sisyphus. The main advertising instruments were the local coffee shops where so called baristas (bartenders) were trying to promote a lifestyle. And entering alliances with Barnes & Noble, Costco, United Airlines and others expanded this network.
There is nothing new about strategic innovation. In 1920, Ford had a 60 percent market share in the US auto- motive industry. It churned out one new, shiny black Model T per minute. General Motors had to settle for a paltry 12 percent of the market. Then, the legendary GM chief
Alfred P. Sloan entered the stage. He reorganized the company into a multidivisional firm.42 The new strategic
objective was a car “for every purse and every purpose”.43
Three out of eight existing models were killed, and the remaining brands (Chevrolet, Oldsmobile, Pontiac, Buick and Cadillac) were each targeted at a particular segment of the market – and they came in more than one color. Henry Ford had to close down his Dearborn factory for a year.
Innovate through speed
Not only does a larger geographical market necessitate a sharper focus, it also decreases the time available to exploit our capabilities. In a real-time society, getting to the future faster is obviously important. Funky Inc. operates in a world in which things are moving at a pace never before wit- nessed. No wonder that Gordon Forward, CEO of Chaparral Steel, concludes that, “To stand still is to fall behind.”44
Once we have a clear focus on our core competences, we need to act at the speed of light.
Traditionally, many European companies have been suc- cessful in what is usually referred to as mature industries. But, how can we then explain that a company like ABB gen- erates half of its revenues from products introduced during the last three years? After you have erased the word syn- ergy, please erase the word mature from your vocabulary and replace it with tired. We should no longer talk about mature industries or markets, but tired ones. Tired indus- tries and markets are waiting for someone to do something revolutionary, radical, and interesting. If we are entering a real-time economy, a remote control reality, people will zap to another company the instant they find that you are old, boring, and out of date.
Innovate through smartness
Working faster is of course not a question of trying harder – just try doing the wrong things twice as fast – it is a matter of working smarter. Even though the new economy comes without speed limits, creativity can not be forced upon people. To be creative we need slack.45 We need resources
and time. We need time to sit down and reflect. We need time alone. We need time to play around. We need time to experiment. We need time to have casual conversations with others. In Japan, people sometimes refer to “nommunica- tion”, rather than communication. Nommu is Japanese for drinking – and for once we are not talking about Coke. The time spent together in a bar after office hours can be critical to the development of new ideas. A lot of venturing, min- gling, socializing and relationship-building in Silicon Valley is done in bars. So if thinking is working, put your feet back on the table, then leave the office and have a drink with your colleagues. Cut yourself some slack.
In a knowledge-based society, brains will always beat brawn. We all know that. But, just how much of a com- pany’s intellectual capital is really used? If your
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Speed rules and speed freaks
Boeing: In a matter of a couple of years, Boeing has managed to reduce
the time it takes to build a 747 or 767 by approximately 50 percent to some 8 months.
Microsoft: Windows 95 was launched across the globe in one day.
McDonald’s: The food chain establishes three new restaurants per day, every week, every
month, year round, all over the world. And, at least a few years back, approximately 1 out of 15 Americans has their first job flipping Big Macs.
organization is normal, and by God we hope it’s not, the answers usually range from 5 to 15 percent. What would happen if a plant manager utilized only 5 to 15 percent of existing manufac- turing capacity? This person would be replaced in months or even weeks. This is apparently not the case when knowl- edge is concerned. The company’s most critical asset is massively underutilized. Little wonder that people usually seem a bit embarrassed when this subject comes up – but they do tend to comply. Maybe 15 percent isn’t that bad after all? The only possible explanation is that somewhere along the line someone tricked us. They tricked us into believing that employment in reality only means “compe- tence castration”. As soon as we enter our office, the factory floor, or whatever, only 15 percent of our body is supposed to be present – let’s hope it’s the upper 15 percent.
We need whole persons – head and heart, body and soul. As it stands today, many organizations do not use knowl- edge – they abuse it. Something can be done and must be done. Remember what creativity expert John Kao says, “Creativity is not like the weather – you can do something about it.”46 And no one can have a monopoly on creativity
– not even a momentary one – not even Microsoft.
Ignoring and listening to customers
Contrary to popular belief, getting to know customer requirements is not very difficult. Let us tell you what all customers want. Any customer, in any industry, in any market wants stuff that is both cheaper and better, and they want it yesterday. Organizations may spend millions of dol- lars every year getting McKinsey, Boston Consulting Group or A.T. Kearney to help them answer this question. But the
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