By Jonathan Schwartz
Published:FT September 12 2006 19:41 Last updated: September 12 2006 19:41
Innovation is the key to survival in this ultra-competitive and remarkably flat global economy. It drives profits and improves the human experience when it is done correctly. But true innovation is precious and elusive. Anyone can throw money around wildly and many companies do just that. But how do you get it to pay off?
The answer: a commitment to innovation that extends beyond the company’s research and development budgets to include every person, practice and policy within the organization. True innovation – the kind that lasts and delivers tangible results – comes from channeling inspiration and creativity as often as it does from any R&D lab.
A recent analysis of the top 1,000 global R&D spenders by business consultant Booz Allen Hamilton found that, with few exceptions, there is no statistically significant advantage to exorbitant R&D spending. The conclusion? It is the process of managing the investment, not the expenditure alone, that matters. Getting there, however, requires significant corporate soul-searching. You might have the most gifted technical minds on the planet. But it is successful management of that talent that determines whether your innovation investments flow to the bottom line or go down the drain. And it takes discipline and character to put your organization under an internal microscope, and courage and conviction to make changes to your business model and technology roadmap. With business cycles that are increasingly difficult to predict, harnessing innovation and managing genius has become an art form.
The global economy places greater value on economies of speed, scope and skill rather than simply economies of scale. This means innovation must be achieved by different departments and business units within the same organization working in parallel rather than in isolation as they often do in large corporations. It also means looking outside your organization to partners, suppliers and customers for new and innovative ideas. Breakthroughs most often occur when a variety of people with disparate interests and backgrounds focus on a shared problem or process.
Here are some principles on which we built our innovation strategy: first, hire the best and let them lead you. Build and encourage a culture of leadership regardless of title or department and ensure there is communication and interaction between leaders of different departments and product groups.
Second, share. Create communities with partners, customers and business groups that allow collaboration and open innovation. After all, this is the “participation age”. Third, create small groups and give them autonomy. Steering committees do not work. Create task forces with the ability to identify and create projects that matter. Bring in different voices in the brainstorming phase. If the same people are consistently bringing new ideas to the table, you probably are not being as innovative as you could be.
Fourth, allow public debate. Transparency of ideas and debate is always healthy but you have to know when the debate should end. Then move quickly to focus resources towards achieving the goals. Finally, have the courage to make hard decisions. At Sun, this was to invest when others were cutting and to drive increased focus in our engineering operations. It also meant querying what we were accepting as fact. What did we, as a company, believe implicitly?
These are the tough questions every CEO and executive team should ask and answer if it expects to become a truly innovative organization. In times of adversity, there is always a moment when good leaders step up and modernize products or processes while holding firm to the core principles that made the company relevant and successful in the first place.
Great companies and leaders pursue projects with dramatic potential, knowing that some will thrive and some will fall short. Innovation is a messy business. But a few dramatic successes can change the world.
The writer is chief executive officer and president of Sun Microsystems. Read Mr Schwartz’s blog