How to Combine Efficiency and Innovation for Business Success

To be successful, businesses need efficiency AND innovation, individual, AND team innovation. Also, their form of innovation must fit their business model.

The importance of innovation in creating or maintaining a competitive advantage is undeniable today. Doubters argue that innovation is too easily copied, so why bother? But that is a reason to push for smarter and faster innovation; otherwise, failure is inevitable. Businesses that accept the need to innovate are searching for a recipe or model that shows them how to achieve success through innovation.

Innovation and Efficient Execution

Some pundits argue that organizations need to ditch their controlling hierarchies and become more like entrepreneurial start-ups. This is a mistake born of the desire for a simple solution. The truth is that all businesses have two very different tasks – one is to deliver today’s results profitably and the other is to create the future. Neither of these tasks should be sacrificed for the sake of the other. The challenge is to find a way to maximize effectiveness on both tasks. Becoming more entrepreneurial is not a key to success if it means throwing out the systems and processes that make money today. All businesses need to earn cash today to fund development for tomorrow.

Individual versus Team Innovation

Too many companies assume that all innovation is an individual matter. Consultants and academics who point to companies like Google or 3M as models for all companies are suffering from a one-size-fits-all mentality. Software companies whose business is exclusively online, like Google, have no repeatedly manufactured product like General Motors or Boeing. Google is all about innovation and any employee can develop or tweak a bit of software. Once it is online, the new service runs itself. Nothing is manufactured on an ongoing basis. Companies like 3M manufacture products on an ongoing basis but their products are small enough that individual employees can develop new ones. But no individual employee in companies like General Motors or Boeing can develop a whole new car or airplane. In these organizations, employees can make innovative suggestions but the development of whole new products must be a team effort involving virtually the whole organization. Innovation in small product or online delivery companies can be almost exclusively bottom-up and individualistic. Large companies need a combination of top-down design and bottom-up input. For example, a an aircraft designer might come up with a new design and then brainstorm its feasibility with a wide range of specialists in order to develop an innovative new plane.

Complexity and Specialization

A software engineer working for Google or Microsoft could move from working on one product to another with much greater ease than could an aircraft engineer. Some engineers at Boeing will be computer system experts; others will specialize in an esoteric form of electronics; still others will know about nothing but the hydraulics relating to raising and lowering the wheels. Specialization is driven by complexity and specialists can only innovate within their area of expertise. They are unlikely to design a whole new aircraft as easily as a lone software engineer could design an entire new piece of software. The bottom line here is that an organization’s approach to innovation must be based on the reality of how it works. Highly complex businesses that make complex products must foster team innovation where individuals are encouraged to contribute ideas within their areas of expertise.

Any drive to be more innovative must find a way of merging the best of an efficiency culture with an entrepreneurial one. Don’t throw the baby out with the bathwater. Secondly, the form of innovation that might work best in particular organizations needs to be based on the type of product offered and the degree of complexity involved in making it.