Saturday, September 04, 2004
From Strategy+Business August 2004 by Nicholas G. Carr
For every thousand flowers that bloom, a million weeds surface. Best to cultivate from the greats.
Management thinking has for some time been dominated by two big themes: leadership and innovation. It's not hard to see why. Both are important yet amorphous subjects. As resistant to definition as they are essential to business success, they offer unbounded opportunities for exposition and exploration to researcher, philosopher, and charlatan alike.
They have something else in common, too. It's come to be assumed that leadership and innovation are universally good qualities to which all should aspire. Through high-minded training programs, reward systems, and communication efforts, companies today routinely seek to democratize innovativeness and leadership - to drive them into every nook and cranny of their organization. In one way, this phenomenon seems yet another manifestation of the peculiarly American assumption that what's good in small doses must be great in large quantities. In another way, it appears to spring out of the shift from a manufacturing to a service economy, with the attendant weakening of traditional management hierarchies.
The cult of innovation seems healthy on the face of it. In a free market, after all, innovation underpins competitive advantage, which in turn undergirds profitability. Being indistinguishable from everyone else means operating with a microthin profit margin, if not outright losses. So why not try to innovate everywhere - to let, as Chairman Mao famously put it, a thousand flowers bloom?
Here's why not: For every thousand flowers, you get a million weeds. Innovation is by its very nature wasteful. It demands experimentation, speculative investment, and failure, all of which entail high costs and risks. Indeed, it is innovation's intrinsic uncertainty that gives it its value. High risks and costs form the barriers to competition that give successful innovators their edge. If innovation were a sure thing, everyone would do it equally well, and its strategic value would be neutralized. It would become just another cost of doing business.
But the high costs and risks also make discretion and prudence paramount. The most successful companies know when to take a chance on innovation, but they also know when to take the less glamorous but far safer route of imitation. Although imitation is often viewed as innovation's homely sibling, it's every bit as central to business success. Indeed, it's what makes innovation economically feasible.
Deliberate but Dicey
So the critical first question for any would-be innovator should not be How? but Where? Deciding where to innovate - and where not to - is fundamentally a strategic exercise, requiring a clear understanding of a company's existing and potential sources of competitive advantage. If corporate innovation involves a deliberate but dicey attempt to create a new product or practice with commercial value, then the target should be one in which a company has an opportunity to establish a meaningful and defensible point of differentiation from its competitors.
The proper focus of innovation will vary greatly from company to company, but at a high level successful businesses can be divided into two camps: process innovators and product innovators.
The article then goes on to compare Dell's and Apple's highly disciplined innovation efforts to Gateway's shoot-anything-that-moves approach.
The lesson is clear: Innovate passionately in those places where you can separate yourself from the competition. Where differentiation promises to be elusive or fleeting, be a cold-blooded imitator.
Creativity Kills Competence
Beyond the dubious economics, one of the biggest problems with unconstrained innovation is that it can end up devaluing competence. It says to employees, It's not enough to do your job extremely well: You're only truly valuable if you "think outside the box" or "push the envelope" or - pick your cliché. That can lead to distorted measurement and reward systems, misdirected activity, and ultimately the disenfranchisement of a company's best workers.
Innovation has its place - a very, very important place - but it's not everyplace. Creativity should not be allowed to shoulder competence to the verges. Acts of innovation may determine what companies do, but it's competence that determines how well they do it. Let a half-dozen flowers bloom, and keep the weeds in check.