The financial crisis pushed efficiency onto the agenda of nearly every corporation. But there has been a general consensus, particularly among blue-chip companies, that you can’t cut out innovation, research and development. In Denmark, where I’m from, the biggest companies, Vestas, Danfoss, Novo Group and Lego, kept innovation expenditures at a considerable level throughout the crisis.
You have to sustain growth even as you cut back on costs, and, to do this, companies need to become more precise. For example, broad-spectrum research projects should be eliminated. Organizations will also need to decide in which part of the value chain they wish to innovate. Do they wish to create new business areas, also known as the “blue ocean” strategy, or do they want to foster incremental growth — the “red ocean” strategy?
An effective type of innovation that has emerged in this difficult economic environment is denovation. Denovation happens when companies push the envelope so far in one direction that it automatically creates an opportunity for push-back in the marketplace. Overexposure to technical innovation makes customers more likely to begin purchasing simpler, cheaper products. For instance, in the shoe industry, when exotic materials and advanced suspension systems become commodities, customers will eventually discover that a cheap, simple pair of sneakers will do.
Even as denovation has emerged, “open innovation” has received a great deal of attention recently. Open innovation happens when companies invite a community to contribute ideas, harvesting the good will of the stakeholders. Open innovation isn’t the silver bullet that followers of University of California at Berkeley professor Henry Chesbrough believe it to be, but done well and under the right circumstances open innovation can save companies money.
2. Is innovation as a discipline still relevant? If it is, why? And, what does it entail?
Innovation has been around forever. It has been an integral part of coping with change and turning change to one’s advantage. Think of the viking long ship’s shallow draft that permitted beach landings, Shaka Zulu’s short spear, the Earl of Sandwich’s meat tucked between two pieces of bread, Mitsubishi’s electric rice cooker. Innovation happens in all historic periods and in all cultures.
The Industrial Revolution accelerated the pace of innovation, making its value and techniques more tangible. Also, the nature of innovation changes as our societies do. The networked society we live in today has given rise to an unforeseen digital innovation boom. But what’s next? I anticipate the next frontier to be innovation that breaks away from resource-dependence, where growth is uncoupled from consumption and product life cycles are prolonged.
Innovation is — and will remain — relevant. Today, however, it has become abstract and institutionalized. Large corporations and institutions have set up new organizational structures to harness the value of innovation, while innovation managers and consultants populate corporate hallways. New organizational structures have worked well to exorcise autonomous individuals and random processes in the past, but they have not been as good at retaining a strong sense of vision and creativity. I see the advent of this new management structure as a threat to innovation’s future potency. Taming innovators might make innovation tame.
3. “Innovation” has become a buzz word in business. Why do you think this is, and what is lost as a result?
Futurist Ray Kurzweil postulates a law of accelerating returns in which the speed of innovation increases exponentially. If that is so, dealing with innovation and the changes caused by it will be more than just buzz. It will be necessary for any business, and for fulfilling any human indeed.
I do, however, agree that “innovation” is a buzz word momentarily. In theory, innovation just means “newness.” Anytime a broad range of businesses open their eyes to the value of a discipline or a new technique there is a period where it causes a buzz. However, I don’t see innovation as a short-lived fad. In the future, I think we will demand to know more precisely what kind of newness we are addressing when someone says “innovation.”
The temporary flood of innovation “experts” makes it very difficult for organizations to differentiate between what’s hot air and what’s not. Some of these “experts” send companies on the wrong track. For instance, Douglas B. Holt, a branding expert I admire, recently turned into an innovation “expert.” Holt writes about cultural innovation in his latest book, but he merely describes brand innovation. Does that type of innovation work? Yes, but it doesn’t mean one should give up older innovation strategies.
4. How can companies or organizations bridge the gap between innovation and action? In other words, when do you stop discussing what could be done and start doing it?
That, in a nutshell, is the challenge of institutionalizing innovation. Whereas innovation has historically been tied to entrepreneurs, it is now being tied to salaried employees who tend to be more risk-averse.
The new breed of innovation professionals that I have encountered can be placed in two categories: innovation custodians and innovation lexicographers. The custodians are a new type of middle manager, meant to oversee the innovators and their processes. The lexicographers are external consultants that will take corporate managers through endless innovation workshops or go on about the aforementioned processes.
Whether de-coupling innovation from entrepreneurship will be successful, has yet to be seen. Organizations that have made that transition successfully have created an internal structure for entrepreneurship, often called intrapreneurship.
5. What companies, organizations or individuals are carrying out the discipline of innovation well or correctly?
I think GE, Apple and Google are examples of organizations that carry out innovation well. I mention these because they are not only successful and base their businesses on innovation, but they use very different mechanisms to innovate.
GE is traditionally driven by its engineers who are able to promote their ideas through the organization. In the early 1980s, GE set up an intrapreneurship program, which allowed the company to create a spin-off and set up a business with GE’s own venture capital while retaining the option to acquire the company later.
Apple, meanwhile, is led by a visionary autocrat, Steve Jobs, who micromanages employees who execute his vision. Alternatively, Apple also acquires companies that serve Jobs’s vision. Apple’s innovations put design first and are centered around picking the right value chain components, letting other companies pioneer the in-depth technological innovation. Apple didn’t invent the PC, the MP3 player or the smartphone. It just tweaked what was valuable to people. This type of soft innovation has proven very cost-effective.
Google applies some of the above but is notorious for their more lax approach. Google employees are allowed to spend 20 percent of their free time to pursue projects of their choice. Some immensely popular projects like Orkut, Google News and even AdSense were conceptualized and developed by Google engineers during their “20 percent time.”
Ultimately, freedom of method might even be an innovation fundamental.
Bonus question: What is your favorite innovation?
It would be wrong to say that I have one preferred innovation. But I am closely following the race to replace cars in cities. There are many fun contraptions, including my top contender for a favorite innovation: the shaft-driven bicycle. The industry will need to continue to improve the current bicycle design. Comfort, finicky gears and oily chains, among other features, will need to be improved or eliminated to encourage more people to start riding and stop driving. Ultimately, however, we will have to give the object that replaces the car the same type of iconic, lifestyle appeal. I am also following the privatized space race, including Burt Rhutan’s spaceship. The revival of airships, such as the ZeppelinNT, is also great to follow.
Jens Martin Skibsted is the founder of Skibsted Ideation and co-founder of the design agency KiBiSi. A native of Denmark, Skibsted studied philosophy with the late Jean-Loup Delamarre at the Sorbonne in France. His bicycle designs are part of the permanent collection at the Museum of Modern Art (MoMA) in New York City and in San Francisco (SFMoMa) as well as Le Cnap in France. Skibsted has been named a Young Global Leader by the World Economic Forum, and addressed the Forum’s annual meeting at Davos in 2011. He is a graduate of École Supérieure d’Études Cinématographiques.