It’s not that we are confused about the necessity for innovation. Most organizations, their leaders and members alike, recognize the need to innovate in order to stay relevant to their customers and to continue growing. Confusion arises when organizations don’t recognize that the systems and processes that serve their current needs are not particularly suitable for creating, introducing, and supporting the new innovations coming to life. Like an ill-fitting suit, an unchanged organization attempting to dress itself in innovation will just look…wrong, and will probably feel uncomfortable, too.
Try and fail, but don’t fail to try.
- Stephen Kaggwa
It’s necessary to keep the doors open and the lights on. To foster an innovation-capable culture does not mean that you have to abandon all the stable processes and actions that enable you to produce products and services as profitably as possible. What is required is the adoption of a mindset that is additive, risk-aware, resilient, and which enables the exploration of the new while tending to the old.
Keeping an eye on the things that fund innovation
The basic drivers that support an enterprise are its ability to produce a set of products or services for which a customer, or group of customers, is willing to pay enough to cover their production while providing some margin for profitability. Those seeking to increase their rate of innovation within their organization must pay attention to the things that are at the heart of why the organization exists.
In the early 1970s, the newly elected president and CEO of Kimberly-Clark, Darwin E. Smith, saw that the company couldn’t survive in the long-term as a paper manufacturer. Procter & Gamble, the large consumer products company, was beginning to challenge Kimberly-Clark in the marketplace, and if there was no direct response, they would likely be overwhelmed. Smith decided that to compete properly in consumer product markets, Kimberly-Clark had to prune its coated-paper business. Within one year of taking control of the company, Smith initiated changes that included the sale or closure of six paper mills and the sale of more than 300,000 acres of prime land. This was unheard of in the company’s history.
Smith recognized that he had a make-or-break situation on his hands. If he and his leadership team didn’t find a way to compete (and win) against Proctor & Gamble, then Kimberly-Clark would be lost. With more than $250 million in reserve, primarily from the land sale, Smith began the process of transforming the paper manufacturer into a consumer products powerhouse specializing in paper products. An aggressive research campaign was launched by hiring specialists away from competitors. Smith also increased the company’s advertising budget substantially, and plans were made for the construction of additional production facilities.
Marketing was central to Smith’s strategy for growth, as Kimberly-Clark emphasized its commitment to consumer products. He realized that the transformation of the company required not only research and development efforts but also new manufacturing facilities, human resource capabilities, and sales and marketing prowess. Only by selling the old business was Kimberly-Clark able to create the foundation for something new.
Similar stories of transformation could be told about Nokia, the mobile technology giant which still sells more handsets than any other manufacturer in the world. It began its life as a paper mill, rubber mill, and a cable works. There’s also that other innovation powerhouse, 3M, which began life as a mining and metals company. Each company had to fund a transition to something new, without which they would not exist today.
How did they make the transition?
Each company had leaders who had a vision of where they needed to go next. They effectively shared and spread that vision so that others would believe in it and commit to it. Each company also took steps to tend to their baseline business so that they could effectively fund the transition to the new business models and product lines that would ensure their future prosperity. And they invested those funds and energies as wisely as possible.
Focusing on the future
The key traits of the organization that can transform itself, creating innovation from its core businesses, are deceptively simple. They understand the need to keep customers pleased, engaged, and actively purchasing existing services. Without that effort, the resources required to fund a transition to a new set of products or services, or a whole new business model, would rapidly dwindle or even become absent. The effective stewardship of available resources also means that organization leaders understand how to foster and promote the risk-accepting practices and resilience across the people in the enterprise, so they can deliver the needed present business results and strive for the business results demanded by change.
The people unable to commit to transformational change are like barbed wire (protectionist or defensive specialists) or drag chutes (slowing down the rate of progress until it collapses in on itself) in an organization. Those companies that do manage wholesale shifts, essentially placing innovation at their core, are composed of people who are steadfast and true, the mainstays and anchors that provide stability and endurance in the face of challenging conditions. Their focus on the possibility of a brighter future is a beacon to all.
Courage doesn’t always roar. Sometimes courage is the quiet voice at the end of the day saying, “I will try again tomorrow.”
- Mary Anne Radmacher