Part 4 in a 4 part series on Drucker strategies for weathering the economic storm â Innovation
The U.S and the EU are facing the prospect of low and slow economic growth for the balance of this decade. Most economists believe the decade will be characterized by mounting deficit, rising unemployment, sovereign credit downgrades, increased interest payments, galloping inflation, misguided economic policies and a host of other economic ills. In this environment, how can managers guide their companies to not just survive but thrive in these turbulent times?
This article is the final of a four part series looking at 4 key Drucker strategies â Organized Abandonment, Continuous Productivity Improvement, Exploiting Success and Innovation â you can immediately put into practice in your own business. This article looks at why innovation is often stifled by your present business operations and what you can do about it.
A mini-ebook with a complete list of the four strategies discussed in this article series is available for free in an easily downloadable form here.
There is a difference between improvement and innovation. Improvement usually means more and better. Innovation refers tocreating and implementing the new and different.
Big difference. Improvement is much easier. True Innovation tends to be resisted by the existing organization.
Organizational inertia always pushes for continuing what the organization is already doing. Newness of more than a trivial dimension is typically squashed by the ongoing organization. Yes, squashed!
Slightly paraphrasing Ted Levitt:
"Anyone who tends to doubt this needs only to examine please his/her organizational experience. Whether in a organization, a government agency,a country club, or church, an intense and usually fierce struggle predictably surrounds efforts to do drastically new or different thingsâ¦
⦠One may ponder why the struggles are always so abrasive, and why the leaders of change efforts always pay such a heavy personal priceâ¦"
"Give us This Day Our Daily Bread"
Drucker and Levitt showed that the most important task of the existing organization is to get today's job done. Rules, procedures, and standards define what is to be done, and how.
"Allegiance to the daily task remains the predominant and inevitable focus. Within this powerfully constraining context," noted Levitt,"to focus as well on trying to get powerful innovations â to do entirely new and therefore disruptive things â is an especially difficult and fragile undertaking."
Most organizations establish order and discipline, that is, deep routinization of a significant part of the work required to produce today's products and services. Innovation, or doing new and different things, by its very nature destabilizes the organizational structure.
This makes many managers uncomfortable â â especially, those without experience in how to accommodate needed innovations.
Wherever routine reigns expect fierce resistance to innovation and innovators.
To reiterate: Newness is unsettling and disruptive to the daily tasks. Therefore, the human tendency is to focus on today's job andpurge from the system anything that is perceived as disruptive.
Producing and Managing Innovation
So, how can an organization successfully practice innovation? Drucker's contribution to the area of creating and managing innovation is without equal.
In this section, we going to briefly discuss only one many of Drucker's prescriptions for making innovation happen â namely, structuring for innovation. This is particularly relevant given the above discussion of how the existing organization consciously or unconsciously tends to sabotage newness.
Structure for Innovation
Many innovative activities must be organized separately and outside of the ongoing managerial business. Repeat this five times to yourself. It could save your organization millions of dollars and prevent lost opportunities.
"Innovative companies realize that one cannot simultaneously create the new and take care of what one already has in full operation. The maintenance of the present business is far too big a task for the people in it to have much time for creating the new, different business for tomorrow."
Making tomorrow happen is far too big and difficult task to be diluted with concern for today. Both tasks have to be done. But they are different.
We cannot emphasize this enough. Innovative organizations put the new into separate organizational components concerned with the creation of the new.
Take, for example, universities and colleges entering the field of web-based degree granting and certification programs. The savvy schools such as Cornell and Penn State have created completely separate entities to deliver, market, and grow web-based programs.
If this is not done it is almost guaranteed that "a war of the ancients against the moderns" will erupt and threaten the internal upstart web-based learning organization â and deprive it of the resources needed to innovate successfully.
We all know from a great deal of experience that "Big Bang" transformations when done within the existing organization almost always fail, creating frustrated, demoralized, and sometimes embittered employees. Equally bad, it inevitably produces marginal success (at best) with little sustainable or lasting impact.
For the existing business to be capable of innovation, it has to create a structure that allows people to be entrepreneurial.
It has to be sure that its rewards and incentives, its compensation, personnel decisions, and policies reward the right entrepreneurial behavior and not penalize it.
Summary of Drucker's Strategy #4
The existing business tends to squash newness of any kind. Organizations exist, as Drucker has so effectively argued, to get specific results.
People do not willingly subject themselves to rules, procedures, bosses, and deadlines for performance. They do so because the results they seek would otherwise be unattainable.
The organization exists to get today's job done. It's quite difficult, if not impossible, to do tomorrow's job very well. Tomorrow's job in many instances, needs a new structural entity, an autonomous, fully-functioning organization of its own.
If youâd like to read more, a short e-book detailing all four Drucker strategies is available for download for free here.
For further reading in this series see:
Strategy 1: Organized Abandonment - Executive hatchet jobs and other misguided cost cutting exercises
Strategy 2: Continuous Productivity Improvement - Why small, continuous improvements are better than constantly shooting for the moon
Strategy 3: Exploiting Success - Stop calling them problems, dammit, theyâre opportunities!
Strategy 4: Innovation - Innovation suffers when everyone's too busy getting through today