Business leaders seeking to justify the critical need to drive innovation often, and erroneously, quote Charles Darwin, whose 1859 book On the Origin of Species transformed the world. “It is not the strongest of the species that survives, nor the most intelligent, but the most adaptable to change,” according to the sage advice.
Alas, there is scant proof the English evolutionist said or wrote those famous words. Nevertheless, the paraphrased comment holds water in 2020, because organisations that fail to prioritise evolution will drown. Conversely, enterprise pioneers who embrace a proactive attitude will sail ahead of rivals by achieving operational optimisation to drive innovation.
Progressive businesses have attempted to keep pace with society and technological advancement since well before Darwin’s time. However, in this digital age, the speed of disruption cascading upon all industries has elevated the level of urgency. Enabling innovation is now imperative for survival.
Some of the brightest ideas come from the most unexpected places. Be open to opinions, have empathy, show curiosity to learn
“Over half of all Fortune 500 companies from 2000 no longer exist because they failed to pivot,” says Simon Marshall, founder of TBD Marketing, a Bristol firm that helps organisations identify and grasp opportunities, either to improve operational optimisation or in other markets.
He points to Nokia – founded in 1865, six years after Darwin’s masterwork was published – as an example of a company that has sought to drive innovation, but has floundered in recent times. The Finnish organisation began life as a wood pulp mill before expanding into other vertical markets, from rubber boots and tyres, to televisions and mobile phones.
Indeed, Nokia was the world’s largest mobile phone manufacturer before Apple introduced the iPhone in 2007 and triggered the smartphone revolution. Four years later, Nokia’s chief executive Stephen Elop warned the company was “standing on a burning platform”, having missed the boat.
Survival of the…most adaptable
Marshall cites another cautionary tale. “Kodak owned the patent for digital photography, but was unwilling to slay its golden goose. It stalled and, when the patent ran out, others stepped in and killed off the photography giant. Organisations need to make brave internal decisions to drive innovation and pivot.”
As markets merge and shift, taking adequate time to consider outside insights, to gain fresh perspectives and spot potential threats and opportunities quickly, is vital. “Nokia performed those three transformations in over a century, whereas Apple’s transition from iTunes downloads to Apple Music streaming took only 15 years,” says Marshall.
“Consider that Netflix initially rented physical DVDs and helped kill off Blockbuster, before launching its streaming service a decade ago. The streaming service is now itself under fire from Disney+, Apple TV+ and others looking to fragment that market again.”
Driving innovation and encouraging creative working, while sustaining operational optimisation, is perilously challenging, though. Tim Flower, global director of business transformation at employment engagement organisation Nexthink, likens it to “changing all four tyres on the car while it’s moving”. He stresses the importance of a heads-up outlook to keep aware of potential problems and possibilities on the horizon.
This outside-insights approach resonates with Emilie Colker, managing director of London design firm IDEO. She posits that cultivating a creative and innovative mindset is the only way to future-proof an organisation. Offering tips to business leaders, she says: “First, acknowledge that you will never have all the answers.
“Listen to your team. Some of the brightest ideas come from the most unexpected places. Be open to opinions, have empathy and show curiosity to learn. When striving for momentum in innovation, remember that your people are your power and unlocking their combined potential should be your number-one priority.”
Successful innovation is people-centric
Sandeep Kishore, who has led the transformation of Zensar Technologies from a legacy IT organisation to a “100 per cent living digital enterprise” since he was appointed chief executive in 2016, says: “People are always at the heart of any innovation. Technology is the tool and the platform, but not the solution.”
Kishore, whose 10,000 employees can communicate with him through the company’s new smartphone application, believes people-centric innovation is most likely to succeed because it is driven by empowering workers rather than increasing profits.
Further, innovation has to be a work in progress. “It’s a continual journey,” he says. “The model of innovation needs to be flexible and adaptable to the changes we keep facing across industries.”
How much, then, should organisations invest in innovation? Alf Rehn, professor of innovation, design and management at the University of Southern Denmark, and author of Innovation for the Fatigued, notes that Amazon spent a mind-boggling $36 billion on research and development alone in 2019, a 27 per cent increase on the previous year.
“That number is about 13 per cent of its revenue and doesn’t include all its innovation expenditure,” he says. “Top companies in innovation-focused industries tend to fall into the 5 to 15 per cent band of revenues. But budget alone doesn’t drive innovation; without a strong creative culture, innovation becomes very difficult.”
Rehn suggests that “culture eats innovation for breakfast” and advises business leaders to “create a working environment in which people feel comfortable presenting new ideas, taking risks and putting the effort in to generate new value”. He adds: “The approach of tomorrow’s winners is balancing outside insight with intelligent inside risk-taking.”
Neil Sholay, vice president of innovation, Europe, Middle East and Africa, at Oracle, agrees. “Innovation is made, not born,” he says. “There’s no proven formula; you can’t simply snap your fingers and expect invention to happen spontaneously. What you can do is create the ideal environment for it to flourish. With the right approach and processes, it can even become regular and reliable.
“While innovation doesn’t need to be big, it does need to be structured. The groundwork must be laid in advance, otherwise it won’t happen at the regularity and speed demanded by the market.”
This article was originally published in Raconteur’s Operational Optimisation report in March 2020