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Building Innovative Organizations

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Apple, Inc. seems perpetually one step ahead of the competition. The company accurately predicts future niches, generates popular, outstanding products like the iPod, iPhone, and iPad, and keeps customers happy. As strategic marketing consultant Christine Thompson reported, “A key element of Apple’s strategic playbook is its relentless pursuit of consumer-delighting innovation.” Apple effectively gives customers what they want before they know they want it! The company passionately pursues what it knows most about and what is most profitable, like the great, innovative organizations described by Jim Collins in Good to Great. This has paid off: Apple stock sells for $350 per share, and the company has $50 billion in cash reserves.

Businesses in today’s technologically-advanced arena face major challenges. We must change, innovate, and adapt by constantly updating how we make, market, and deliver our products and services to customers. If we don’t, competitors will!

To boost innovation as well as staff and customers happiness, we set out in 2007 to build great, inventive, profitable companies. These are the strides we have taken toward this goal:

Hire the Right People: To maximize productivity, organizations need a balance of personality types: leaders, innovators/entrepreneurs, and workers who get the job done. It’s rare to find all three traits in one person, but some may have overlap from multiple groups. However, avoid hiring too many of any one category (employ only creative entrepreneurs and you will never get anything done!). Leaders should hire those who complement their weaknesses, rather than “yes” people who think like they do. To build well-rounded workforces, we use personality and skill tests, as well as three interviews (by three different people) over three days to assess candidates’ fit within our companies.

Develop the Vision: Innovation, though exciting and potentially profitable, must be managed well. Leaders should create simple, cost-effective business plans focused on small numbers of projects that make clients happy. Innovation will thrive when staff members see where they’re going and are allowed to give input on getting there.

Execute the Vision: Innovation begins with ideas; successful organizations transform those ideas into actions that are weighed, debated, and executed with efficiency and profitability.

Take Good Risks: As President Nixon once said, “If you take no risks, you will suffer no defeats. But if you take no risks, you will experience no victories!” Diversified revenue streams allow businesses to experiment with new ideas while maintaining financial safety. Eighty percent of our companies’ resources go toward business ventures that pay our bills, with the remaining 20% devoted to new markets. We never place all our eggs in one basket! Success is generated from hard, passionate work, smart ideas, careful planning, and teamwork, not strike-it-rich schemes.  

Limit Rules: All organizations need reasonable structure; however, bureaucracy (and the resulting slow decision-making and poor execution) does not fuel creativity. Like Southwest Airlines, we encourage employees to question policies they believe are unethical, illegal, inefficient, ineffective, or unprofitable. If any are proven to be true, we eliminate the policies.

Avoid Micromanagement: Leaders should define their expectations and then give employees freedom to implement ideas.  

Develop Innovative Mindsets: Everyone throughout the organization should examine all processes, constantly asking themselves, “Can we do it smarter? Build it cheaper? Improve quality? Increase profit? Enhance employee and client happiness?” This process, called Total Quality Management (TQM), allows us to strive for reasonable perfection without overworking staff. Promote working smarter, not harder or longer.

Build Strong Teams: We view all employees as company leaders and owners. Effective companies emphasize teamwork toward common goals—several heads thinking together always produce superior work.

Invite Debate and Suggestions: If people feel unafraid to voice opinions, they will question the status quo and offer new ideas or better ways of doing things.

Assess Success: Organizations should build simple, efficient processes to weigh ideas. Committees (composed of people with different specialties and personalities who work well together) should debate the pros and cons of new ideas. They should be willing to tell the Emperor that he has no clothes on! Murphy’s Law should have a seat at the table as well—be prepared for the worst to happen, even while hoping for the best.

Such committees are necessary because resources are finite. Thus, leaders have to make tough decisions on which ideas to pursue. If the committee feels an idea is worthy, pose it companywide for input, using different methods to gather responses (online surveys, open discussion, one-on-one interviews, and small groups). Look for ways that generate the greatest feedback. If creative people must wade through sluggish hierarchies to get their ideas on the table, they won’t propose them. Most importantly, new ideas must fit into your strategic plan.

Field Test: Once innovations are screened, implement them on smaller scales to determine budget feasibility and their fit with the company’s vision, mission, and purpose. Give the reins to people who will enthusiastically champion the idea. After the experimentation period ends, vigorously debate the pros and cons of larger-scale implementation. Remember to involve customers when considering new ideas. Your research may indicate that a client “needs” the new service, but if they don’t “want” it, expect trouble. Instead, seek out the best ideas from staff, experts, customers, research, and the public to simultaneously address client “wants” and “needs.”

Conduct Cost-Benefit Analysis: Determine the costs of new strategies before implementing them.In recent years, we closed a training division that once generated huge profits. Although the trainings were excellent and in-demand, they eventually required huge amounts of resources to implement but produced minimal profit. Successful organizations focus on activities that both fit their strategic plans and generate the most profit using the fewest resources.

Communicate: Creativity grows when employees know what is going on in the company. Share news and minutes companywide to encourage cross-division participation.

Learn from Mistakes: The risk of failure must be compared to the potential for success; however, there are times when, regardless of preparation, you will fail.Fortunately, there is opportunity in conflict. Your employees can turn mistakes into gifts by laying them on the table for all to dissect and learn from, and you should show them that occasional failure is acceptable. However, once you have learned from the experience, do as Jack Welch told us: “When you see that the idea isn’t working, cut your losses and move on to other ventures.”

Reward Innovative and Competent Staff: Distribute financial incentives and recognition to those who produce at the highest levels and generate the best ideas.

Bottom line: Employ competent people, assign them jobs they desire, define expectations, trust them, and turn them loose. Then, watch the magic!

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Blake DuBose graduated from Newberry College School of Business and is president of DuBose Web Group. View our published articles at www.duboseweb.com.

Mike DuBose has been in business since 1981 and is the author of The Art of Building a Great Business. He is the servant owner of three debt-free corporations, including Columbia Conference Center, Research Associates, and The Evaluation Group. Visit his nonprofit website at www.mikedubose.com.

Katie Beck serves as senior writer to the DuBose family of companies. She graduated from the USC School of Journalism and Honors College.

 

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