The innovation machine

29 Dec 2010 Sandeep Mehta

The Economist has an interesting article by Joseph Schumpeter  The innovation machine:

Hardly a week passes without someone publishing a book on the subject. Most are rubbish.

I tend to agree. There is so much hype around innovation, but no one really defines what they believe is innovation.  Even the Oslo Framework definition talks about new products and new methods.  What is the difference between invention and innovation?  All new product lines automatically become innovation?  I am thinking we should focus on R&D effectiveness and not really worry if it is innovation or not. Anyway, back to the article:

Last year Mr Govindarajan and Mr Trimble (hereafter: G&T) published a seminal article, with Jeff Immelt, the head of General Electric, on frugal innovation. In their new book they address two subjects that are usually given short shrift: established companies rather than start-ups and the implementation of new ideas rather than their generation.

I like frugal innovation as a concept because it focuses the R&D team and drives innovation.  The two new thrusts are:

The fashion these days is to focus on the supply side of innovation: for example, by encouraging everyone to think big thoughts. 3M, the maker of Post-it notes, expects its workers to spend 15% of their time on their own projects. Google expects them to spend 20%. This approach is attractively democratic: by giving everyone a chance to innovate, it makes everyone feel special. Or so the theory goes. G&T are ready with the cold water. The let-them-loose approach spreads resources thinly and indiscriminately. Companies dissolve into a thousand small initiatives rather than focusing on a few big problems. It also produces far too many ideas: managers have to spend weeks sorting through the chaff to find a few grains of wheat.

That is give people time to think of new things and innovation will happen. I agree that is a good idea. However, it is important to remember that R&D management becomes even more important when you are letting technologists roam free. One needs to guide and nurture right ideas and to do so requires a good evaluation scheme to identify those ideas that are worthwhile.

A second approach focuses on closing the loop between ideas and results. Nucor Corporation, a steelmaker, gives its workers bonuses if they can produce steel more efficiently. Deere & Company, a maker of farm machinery, has produced a detailed playbook on how to design new tractors. G&T concede that this approach is an excellent way of making incremental improvements to existing products and processes, but suggest that it has little chance of producing a big breakthrough.

Interesting debate! More on it below.  However, the authors insist that the only way (or the primary way) to drive innovation is to break out a group that can innovate.

G&T argue that companies need to build dedicated innovation machines. These machines need to be free to recruit people from outside (since big companies tend to attract company men rather than rule-breakers). They also need to be free from some of the measures that prevail in the rest of the company. But they must avoid becoming skunk works. They need to be integrated with the rest of the company—they must share some staff, for example, and they must tap into the wider company’s resources as they turn ideas into products. And they must be tightly managed according to customised rather than generic rules. For example, they should be held accountable for their ability to learn from mistakes rather than for their ability to hit their budgets.

I have seen many innovative ideas rejected because they were not invented by the team.  Setting up a separate organization just brings foreign body rejection a little bit less difficult.  More often than not, the innovation organization becomes an outcast and root cause of tremendous organizational conflict.  This has happened many times with the original Skunk Works (at Lockheed) it self.  Many people do not realize that Skunk Works was successful because they were paid by the government to do work.  They were a profit center.  Trying to replicate Skunk Works in non government area is going to be quite difficult.  More importantly, innovation to invention transition from Skunk Works has been far from effective.
So, what are my recommendations?  Effective R&D management, of course!  Only managers can provide challenges that help teams innovate, identify bright ideas and fund them so that they can be transitioned into inventions and products and avoid organizational conflict / foreign body rejection.  Much more stuff is here.

Leave a Reply