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Rita McGrath

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May 23, 2012

The empty innovation mantra – way to GO WSJ!

I was practically standing on the bleachers and cheering (well, metaphorically, anyway) when I read today's piece in the Wall Street Journal, "You Call That Innovation?"  Innovation has fallen victim to the same thing that happened to the word "strategy" some years back – remember "strategic procurement" "strategic human resource management" and "strategic supply chain" — all meant to indicate that the various activities were important.  But strategic?  I beg to differ.

So, innovation.  If you read company's annual reports, listened to their CEO's and plugged into their marketing materials,  you would conclude that the corporate world is awash in new technologies, new designs, new user experiences, new business models and new ways to delight and inform us, their adoring customers.  But those of us who actually work a lot with innovation, such as my good friend Scott Anthony (author of The Little Black Book of Innovation) and his mentor and mine, Clayton Christensen, grapple daily with the reality that when it comes to real innovation, most companies bungle things rather badly.

For one thing, the record of companies at driving innovation-fuelled growth, by and large, is dismal.  Very few manage it as a continuous, consistent process.  As I reported in a recent Harvard Business Review article entitled "Lessons from the Growth Outliers," out of nearly 5,000 publicly traded firms as of the end of 2009, only 10 had successfully grown their net incomes by 5% a year each year during that period.  That's a tiny minority to have gotten the innovation thing right (if we buy the argument that innovation and growth are strongly linked). 

For another, there are just too many flops, missteps and head-scratchers out there for it to be common knowledge how to get innovation right.  Even very successful companies can't seem to make innovation a systematic and routine process.  And believe me, the old "give people 15% of their time to do whatever they want and great innovations will happen" isn't the path forward.  You need ideas, sure, but most companies I work with have more great ideas than the day is long.  Thinking of stuff is not innovation.  Tinkering with stuff is not innovation.  Even inventing stuff is not innovation.  Innovation instead, when it's done right, make us go "wow, of course, why didn't I think of that?"  It creates complete experiences that we want to engage in.  It eliminates inconveniences and hassles and improves our overall experiences.  At its most dramatic, it creates entire categories of offerings, so new that we find it hard to name them at first. 

Perhaps an example – one that isn't Apple – would be welcome.  I'm very taken at the moment with a real innovation for a terribly mundane thing – the lowly household thermostat.  You may have run across the company Nest, which makes a thermostat (of all things) that promises to revolutionize the category.  After reading reviews of it, I couldn't but order them.  It's a revelation.  Like most people, I never really got the hang of programming my so-called programmable thermostats.  Moreover, it seemed every time the power went out the programs went blooey.  Only an engineer could love those things.  The Nest, instead, is a thermostat that learns from you and programs itself.  You can control it remotely. You can make adjustments on the fly.  Once they master basic heating and cooling, I wouldn't be surprised if the Nest people start to tackle other things in the house that are poorly designed, clunky or just not user friendly.  The alarm system, for instance.  This is an innovation – harnessing technology to solve a problem in an entirely new way, with a commercial model behind it.

But what passes for innovation at most companies????  Sigh. 

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