Global Innovation Index

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Innovation is a social process. It is not a technocratic procedure. A.G.Lafley and Ram Charan, in their book Game Changer say, “To succeed, companies need to see innovation not as something special that only special people can do, but as something that can become routine and methodical, taking advantage of the capabilities of ordinary people.” The idea of innovation as social process is a recurring theme of the book.

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Innovation is the conversion of a new idea into revenue and profits. Innovation is not blue-sky invention. It has a purpose – to generate revenue. But successful revenue generation is possible by connecting with customers.

What is the social process they are talking about?

Firstly, innovation is a process where people are at the centre in all the three dimensions

Lafley and Ram Charan look at customers at two important levels, viz. (a) The rational level, where the customer considers the product or services from a purely utilitarian dimension like what use the product provides, how it makes life more comfortable etc. (b) The emotional level where customers opt for the product for reasons beyond its utility. An example is why many people would rather buy Unicef Christmas cards rather than better and cheaper alternatives. The emotional need to connect with children in need is beyond the mundane utilitarian needs. Another queer example of emotional level is the way the globally proclaimed Indian auto-maker Tata’s Nano car’s disastrous failure. The product may be value for money, but the great innovation which brought the product to market obviously did not understand the emotional level of the customers. As every brand expert now predicts the past, the reason why the car failed is because the customer did not want to buy a car which is labeled “cheap”. As Lafley and Ram Charan put it, “The most essential component to game-changing innovation is to deeply understand your consumer at both the rational and emotional levels. It requires deep understanding of what drives their emotions…not only their needs, but also their aspirations”.

Secondly, innovation is an integral part of the management process. Innovation is not the output of a few specialists musing in fabled ivory towers. Successful innovation is part of the everyday work. It is not something special that only experts and special people can do. It is “something that can become routine and methodical, taking advantage of the capabilities of ordinary people”..

Thirdly, the importance of the case for opening. Social process means the networking and interface amongst the people. This is what the authors call ‘Open architecture’. It entails organizing people in a way that enables the business and its “people to open themselves up to get ideas from anywhere at any time”.

The five building blocks of the open architecture are:

a. Flow of ideas within the organization as well as from outside.

b. A clearly defined social mechanism for selecting ideas to be green-lighted which takes into consideration the supremacy of the customer.

c. Nurturing and ownership of the idea taking responsibility for funding.

d. Go to market all at one go or in phases.

e. Killing ideas which do not succeed or giving it a lower priority.

Fourthly, learning from past success or failure. Failure is not the impossibility of success. Failure opens new windows by way of feed-back. Chris Argyris said that while success provides single loop learning by telling us how to do, failure provides us double-loop learning by not only telling us how to do, but also how not and what not to do.

There are interesting examples of AG Lafley’s learning from transforming failures into feed-backs. We limit ourselves to three of them from a longer list.

a. Product innovated: Fit Fruit and Vegetable wash. It is still in market owned by another co.

Learning: Required significant consumer habit change.

b. Product innovated: Solo laundry detergent. It has been discontinued.

Learning: Small idea.

c. Product innovated: Vidal Sassoon hair Care. $100mn in retail sales, hence discontinued.

Learning: Didn’t sustain brand differentiation vs. competition.

Lastly, the culture of innovation. We noted above that all innovations may not be successful. The organizational culture of innovation has to accommodate the possibility of failures, and the social process needs to provide the space for learning from the failures. Lafley’s own experience in P&G is very illuminating. He says that when he joined P&G, he was assigned secret projects which finally never made it to the market. He was concerned if he would get another project. Happily he did, and made a career in P&G. because P&G was not afraid of failures.

Tailpiece: The authors make an assertion that Leaders of innovation are made, not born. Indeed, if it were otherwise what will the leadership guru, Ram Charan do?

On 5/28/2014