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Innovation Management: Working Smarter with the Power of Collaborative Intelligence
By Howard Eisenberg, President, Syntrek, Inc.

Ninety percent of all new products are actually just simple "line extensions" that fail to substantially increase corporate revenues. Consequently, most established large organizations are staggering, while innovative upstarts are thriving...

Times sure have changed! Computers and telecommunications have literally transformed our world. We have generated as much new information in the past 30 years as in the previous 5,000. The half-life of new knowledge is now less than two years and product life cycles have shrunk from several years to mere months. The very nature of change itself has changed! Traditional change was evolutionary and characterized by incremental, linear alterations. Current change by contrast is non-linear and characterized by rapid transformations into completely different processes and structures.

Not surprisingly, most organizations are not coping well with the onslaught of unrelenting, revolutionary changes. Despite rapid change, 90% of all new products are actually just simple "line extensions" that fail to substantially increase corporate revenues. Consequently, most established large organizations are staggering, while innovative upstarts are thriving (for example Motorola vs. Nokia).

Downsizing or dumbsizing?

To cope, many organizations rely on decreasing short-term costs by cutting personnel, rather than on value-added enhancements. Ironically, despite the current popularity of concepts such as "Intellectual Capital" and "Knowledge Management", most downsizing operations are actually wasteful exercises in "dumbsizing". As well, about 80% of change management programs fail to achieve their objectives because of over reliance on simplistic employee "motivational" remedies. Team-building training programs too suffer from relying on simplistic "edutainment" and overly optimistic notions of "emotional intelligence". Even the limited benefits of such programs are undermined by periodic downsizings, which discourage staff from sharing information and working collaboratively.

Further, stress overload is now the leading cost driver of disability and worker's compensation claims. Yes stress management training programs tend to be poorly funded, staffed by inadequately trained facilitators and counsellors and function in a superficial, reactive mode.

Organizations as living organisms

But successful organizations, like living organisms, are intelligent systems that learn and adaptively apply what they have learned. Fritjof Capra, a leading philosopher of science and author of the 1996 book The Web of Life, coming from a holistic systems perspective, identified several basic principles of "Deep Ecology" for sustainable organizations:

Interdependence: the success of the whole organization depends on the success of the individual employees, and the success of each employee depends on the success of the organization as a whole.

Flexibility: results from multiple feedback loops to enhance adaptation to changing situations.

Diversity: yields greater resiliency for adapting to changing conditions since there are many different information resources for coping with the various challenges.

These three key principles are scientifically based concepts, but more importantly they are also supported by research data on corporate performance. For example, Professors Collins and Porras at Stanford's Graduate School of Business, and Professors Kotter and Heskett at Harvard Business School, both independently discovered that the most successful organizations have strong fundamental guiding values and adaptive practices. In sum, they were characterized by dynamic corporate cultures dedicated to employee empowerment and continuous improvement. According to Professors Kotter and Heskett, this was reflected in powerful financial performance: These types of corporations increased their net profitability over an 11-year span by 756%, in contrast to just 1% for the companies which were not adaptive to change! (Wal-Mart and Hewlett Packard are some examples.)

Creative thinking and innovation

"Creative Thinking" means original thinking (i.e. a novel way of perceiving, or rearranging data). "Innovation" by contrast is the successful application/commercialization of creative thinking and applies to the various business processes (e.g. financing, production, marketing, distribution), as well as to the improvement of existing (and/or development of new) services and products.

Contrary to popular belief, creative thinking is not an ability restricted to an artistically gifted minority, but rather a learnable competency for all. Since creative thinking is a learnable competency, it can be increased by training programs. However, in order for the creative thinking skillset to really add value, the organizational culture must also be redesigned to support its rollout as successful innovations. This requires a lot of hard work and appropriate resources. (As noted by one of the world's most prolific inventors, Thomas Edison, "Creativity is 1% inspiration and 99% perspiration").

Innovation management

Despite the effort involved, innovation management, which refers to the requisite organizational values, resources and processes that enable a high level of consistent innovation, is now an imperative for organizations to survive and thrive in this era of non-linear change. It is also the only sustainable way of working "smarter", rather than harder.

A recent international survey by Arthur D. Little, an international management consulting firm, found that 84% of business leaders agreed that innovation had become a more critical success factor than it had been five years previously. However, only 25% of businesses were satisfied by the current level of innovation in their own organizations.

W. Edwards Demming, the "Father of Total Quality Management" advocated the precept, "Drive out fear", for reinforcing risk-taking, which is essential for innovation. Yet, individuals will not intentionally question and experiment beyond the bounds of conventional practices, unless they perceive it is safe and potentially rewarding for them to do so. Similarly, teams' collective intelligence will be no greater than that of its individual members if members fear that data sharing and collaboration will result in redundancy.

Innovative companies

Progressive, innovative companies, such as 3M, Dupont and Royal Dutch/Shell, enable all of their employees to have additional time and financial resources to pursue the development of their innovative proposals.

Other outstanding innovators, such as Toyota, track managers' success in encouraging direct reports to generate suggestions for improvement and include the results in performance appraisals. This results in more than one million such improvement suggestions annually (95% of them are implemented.)

Some innovative companies even mandate innovations. For example, at 3M the divisions are expected to generate 30% of sales each year from products developed within the preceding four years. This prevents employees from becoming complacent by relying on the tried and true.

Innovation management requires employee training in creative thinking, plus modification of the corporate culture to encourage risk-taking and the provision of logistical resources to enable the progression from developing creative ideas to successfully rolling them out as innovations.


This article was published in the November, 2002 issue of "The Training Report," and is copyrighted by its Publisher - Crownhill Publishing Inc.


Howard Eisenberg (howard@syntrek.com) is the President of Syntrek

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