Innovation Isn’t Tied to Size, but to Operating Rules or People

In her HBR post Innovation Isn’t Tied to Size, but to Operating Rules  Nilofer Merchant talks about how both big and small organizations are capable of Innovation and it is a widely accepted myth that large organizations are bureaucratic and small ones are creative. She takes the example of HP and IBM and places the success of Innovation on Operating Rules rather than the size of the organization.

My question to the author is – is it operating rules which are deduced in retrospect or is it the people who are driving the organization on whom the innovation in an organization depends. I have always believed if the leadership has a string belief and a clear vision for Innovation and the message is sent across clearly across the ranks, Innovation happens irrespective of the size of the company, any rules existing or not and people willing or not. People still work for people and the biggest boss is who everyone works for. If people know that boss is serious about innovation, they will go and learn every trick and tip required, get help from wherever it is available and make things happen.

Yes, people will form some operating rules and refine them over a period of time to make innovation happen. But, will the presence of rules make people do innovation – I have serious doubts.

I agree that Innovation can happen in both big and small organizations, though the needs and the way it will happen will differ depending upon the size. In both cases, though you need the top leader to be serious about innovation and the rest will follow and it is also demonstrated in the examples Nilofer sites.

Why Innovations Fail

Frederick E. Allen in his Forbes article Why Innovations Fail: It’s All in the Ecosystem sites many examples of Innovations that were first movers in their categories were failed as a commercial product. He  looks deeper into each of these cases and says they failed because though the product was great, but the team failed to take care of all those in the ecosystem. For example a technology tyre did not think about the repair shops who will have to upgrade themselves to cater to these new type of tyre. He then compares Sony e-book reader with Amazon Kindle, which was launched later but had all the right tie ups with the publishers. He of course talks about Apple products that always seem to get everything right despite being a closed system to an extent. 

I think when you commercialize an innovation, you do not to take a very critical look at all your links in the supply chain and see who all would need to change what all. What are the costs involved for them versus the returns that they can expect from the new product. Most products lie at the middle of the supply chain with some suppliers involved and some service providers at one end and customers or consumers at the other end. You need to fine tune both the ends so that the product can be a success. 

So look for those weak links and strengthen them before hitting the market.

Electric Cars and their viability

My friend Arun Kottoli reviews Electric cars both technically and ecologically. I think it is a brilliant analysis by someone who has been a user of an Electric car for sometime.

I think the ecological issues have to be addressed by reducing consumption and not shifting from one energy source to another. Shifting from petrol or diesel to electricity is just doing that. It may give us a ‘feel good’ factor for sometime, but ultimately we are still consuming non-renewable resources. Only solution is Reduce, Reduce, Reduce.

Reasons for failure of business model Innovation

Saul Kaplan mentions in his HBR articles the 5 reasons that companies fail at business model Innovation 

In my mind all this comes from the resistance to change at the top leadership level, particularly at the CEO level. It also comes from the short sighted view of quarterly results for the publicly listed companies. The pressure to deliver every quarter, which is not too long a period coupled with a comfort at the status quo prevent them from looking at the disruptive innovations like business model innovation.

This leads to a question should the ability to change or at least be open to change be a key criterion for choosing a CEO of the company. Should they be judged on how many different models have they explored in their term as CEOs?

At the same time we have companies like Coca-Cola which have flourished for more than a century on the same business model. They primarily do incremental innovation by way of introducing new products or penetrating new markets, but the business model has remained same. They work with partners across the world and excel in marketing. This leads to a question is the business model innovation a choice based on type and stage of business is it a must?