On the Road to Becoming an Innovative Company – Part 1
Recently I had the honor to deliver the keynote presentation at an event called ‘R&D Summit 2013’ in Mumbai, where chiefs of R&D/Engineering function of more than 60 organizations in western India were present. The event was sponsored by SAP. I took the opportunity to speak on the topic of innovation in general, and how SAP’s solutions support an innovative organization in particular. Here I summarize some of the points I made to describe how a company can become truly innovative:
First prerequisite: A commitment from top management to actively participate in innovation efforts and help create an innovation-friendly organization culture
Secondly, there should be an integrated approach involving products, processes and people to sustain the culture of innovation.
Lastly, I focused on the tools that help you create a framework to give expression to the spirit of innovation, namely, the enterprise applications backbone to comprehensively cover portfolio management and product data management.
The presentation was well received, and some members in the audience later suggested that I write a blog on the points I made.
In this first part of my blog, I will expand on the first point I made, namely, an innovative organization has a culture of innovation built over years, with active participation of top management.
A Culture of Innovation
Organizational culture is a complex phenomenon. When I say ‘culture of innovation’, what do I mean? It is this: the organization’s vision, mission and policies reflect a focus on innovation as competitive differentiator, and the employees understand this and encourage each other to innovate. Such a focus manifests itself in concrete instances of new discoveries and their applications, and necessitates and also imparts nimbleness to the organization around its products, processes and people. The innovative company not only responds to challenges quickly by changing itself rapidly, but also proactively introduces new technology and processes to put it ahead of others.
However, such a culture cannot be achieved through an overnight transformation. It needs a commitment and conviction that must start at the top.
Top Management’s Involvement
This means that the CXOs must not only support the ideas and innovations through funding, etc., but should ideally participate in the process of innovation actively. Some examples immediately come to mind. Apple, Inc. is today known as one of the most innovative companies, and this reputation came largely through the personal efforts of its founder Steve Jobs. He was a charismatic person, a great presenter. But more than his on-stage persona, it was his relentless pursuit of perfection every day at work that took Apple to the heights of success. Another example, this time closer home at SAP, would be the genesis of the SAP HANA database, and the personal involvement of Vishal Sikka and Hasso Plattner in the groundbreaking innovation.
Today, we see this phenomenon more as an exception than as a rule, especially with big companies. Why should it be so? One reason could be that a truly great innovation happens after trying out, discarding and combining many ideas, after experimenting them, taking risks along the way. This is possible either in a start-up where there are few people to question the experimenter (especially if the start-up has come into existence precisely to try an idea out), or in a university research environment. Big corporations can legitimately benefit from these endeavors either by buying the start-ups and/or their innovations, or by funding university or private research. But this approach does not guarantee success in the long run. The start-up you are looking at may be gobbled up by your competitor before you’ve made your decision. For a sustained supply of breakthrough ideas, the company must unleash the potential of its own workforce.
An active interest and participation by a CEO in the company’s R&D function dramatically impacts the culture of the organization. First, the employees get the right message, and secondly, the image of the company that is built this way in the outside world also works subconsciously on the employees and starts affecting their behavior. A cultural transformation follows.
In the next part, we will take a closer look at the integrated approach that I talked about in my presentation.
Comments and feedback welcome!
(Disclosure: I work for SAP. Opinions expressed here are my own.)