The rules of innovation can be flexible

FT.com

November 11, 2013 3:44 pm

By Andrew Hill

For almost every insight, there is an opposite approach

If a destination’s desirability is measured by the number of maps that claim to lead you to it, innovation is the corporate world’s Taj Mahal. Among the manuals on sale is an Innovator’s Guide, a Cookbook, a Toolkit, a Path, a Way, a Handbook and a Manifesto.

My addition to the genre would be The Innovator’s Contradictions. Insights gleaned from last week’s FT Innovate conference suggest that, for almost every rule of innovation, there is an innovator who has made a breakthrough – and a fortune – flouting it. Here are seven examples.

Flexibility achieves more than process and structure. “Processes don’t get people excited,” says Michel van Hove of Strategos, the consultancy. Process without purpose does indeed numb the mind, making useful, let alone innovative, work impossible. But without structure, innovators become lazy. Start-ups can be a near-perfect amalgam of purpose and process – but as soon as they get bigger, they require rules, which can even spur creativity.

The best innovations are conceived on a shoestring budget. “Frugal” innovation has many champions. But do not confuse innovative products or services for customers on a budget with low-budget innovation.Lockheed Martin’s Skunk Works, which developed next-generation jet fighters, became a byword for how companies can take great leaps by developing new products secretly and away from the corporate centre. But as Luke Mansfield, European head of product innovation for Samsung Electronics, points out, the aerospace group staffed the unit with its best people and invested heavily in it.

Youth trumps experience. Members of the digital generation do have an edge in appreciating and assessing the value of social and mobile innovations. But Mr Mansfield says he looks for people who have brought innovative concepts to market and, as a result, “know when to fight and when to give up”. Companies have a habit of promoting experienced innovators into management, sacrificing their skills to the bureaucracy. He predicts they will develop innovation collectives and “experience farms” that cultivate and share this scarce resource.

Innovations are always new. By definition, yes. But often the most useful innovation is one that takes an established tool or habit and develops a new way of using or exploiting it. Klarna, a Swedish 
e-payment company, has found that buy-now, pay-later invoicing remains very popular. Indeed the number of customers opting for it is increasing. Klarna has duly given this venerable payment method a new platform for the internet age.

Keep experimenting. Hal Gregersen of Insead – co-author of one of the better innovation manuals, The Innovator’s DNA – uses the example of Coinstar, the US manufacturer of machines to convert loose cash into notes, which tested customer enthusiasm for a new approach by creating cardboard replicas of machines, with real staff inside. Social media and online testing allow innovators to trial many variants of products. But they ignore at their peril the success of product-obsessives such as Apple’s Steve Jobs or Lee Kun-hee, Samsung’s chairman, who incinerated 150,000 defective cellphones in a field outside a factory in 1995, then ordered bulldozers to drive over them. The “fail fast” ethos of many companies must be combined with relentless perfectionism.

Loyalty breeds complacency. It is modish to suggest you should encourage your best staff to leave – or at least not fight to keep them. But the risk is that your transient team will never be together long enough to build anything of value. Loyalty can be a competitive advantage. According to Ben Holmes, partner at venture capital group Index Ventures, this is why the hub for computer gaming innovation is in Europe, not Silicon Valley, where rivals poach skilled developers with the promise of Twitter-sized success before they can make their mark at their previous employer.

Finally, do not just assume that innovation is about technology. As Werner Vogels, Amazon’s chief technology officer, told last week’s conference, innovation is “a business revolution, not a technology revolution”. Amazon makes a point of having neither a research and development department, nor a vice-president of innovation. Everyone must come up with new business ideas. Innovation is about people. If you can persuade your staff it is not always synonymous with pure science or gorgeous gadgetry, that really will be a breakthrough.

andrew.hill@ft.com