Innovate or Stumble

By Gary Hamel  |  Posted 10-01-2001 Print Email
The management guru urges companies to rewire themselves for innovation—and use the quality movement of the 1970s as a guide.

Back in the 1960s, if you asked somebody where quality comes from, you would have gotten one of two answers: It either came from an artisan working at Gucci or Hermes or some other luxury goods manufacturer, or it came from the inspector at the end of a production line somewhere. Then W. Edwards Deming came along and said we can make quality everybody's responsibility, but to do it we are going to have to change our organizations and our values and our processes. The rest is history.

With respect to innovation, we're where Deming was with quality around the late 1960s and early 1970s. Innovation must be everyone's responsibility. With the quality movement, most of the core elements of what came to be called quality management had already been identified, and the methods and the tools were there. But it took companies a long time to admit to themselves this was needed—and to abandon a lot of what they already believed.

I did a survey of the annual reports of all the Fortune 500 companies and found that 85 percent of them list innovation in some way as an important capability. Yet when you ask people in these organizations whether they believe their company is truly strategically innovative, the answer is an overwhelming no. So we have an enormous gap between rhetoric and reality. I think the real problem is this: Most senior executives do not have an intuitive model of what it means for innovation to be a ubiquitous capability. Recently I asked the head of business development for a Fortune 500 company to describe his company's corporate innovation system, and he laughed, saying they don't have such a thing. They have some R&D over here and they run some brainstorming sessions over there, but if you ask him if they've got a systemic, companywide approach to innovation, the answer is no.

To get there, first you need to get everyone thinking about their contribution to innovation. Then you have to change your metrics, to measure it and improve. And third, information technology has to play a role. IS has to support the capability you're trying to build. One of the fundamental problems in large companies today is that somebody with an innovative idea, large or small, may be widely separated organizationally or geographically from somebody who has the cash to invest in that idea. Innovators may also be separated from the people who have the technical capabilities to help them design and test their ideas. So the goal is this: Build a worldwide information system for innovation where you can connect talent, capital and ideas extremely quickly without having to go through all the traditional management processes. In other words, IT is going to have to change to support ubiquitous innovation.

Why act at all? Most of the efficiency-based strategies that companies used during the 1990s to prop up their share price have simply run out of steam. E-business is not going to solve that problem. So it's a very simple question today: Which companies are going to have the guts of a Toyota or a Sony worried about quality back in the 1960s to say, "This is important and we're going to systematically challenge the way we've put this company together—the way we've organized, the way we train people—to build this new capability"?



 

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