How can companies emulate Apple’s talent for innovation?
Apple CEO Tim Cook recently described the demand for iPhones as “staggering” after divulging that the company sold 74.5 million units in the holiday quarter even though it raised the price of this iconic product. Total sales in the period amount to more than 34,000 phones per hour flying off the shelves around the clock reported the Wall Street Journal.[i]
Staggering indeed, and a powerful launch pad for the company’s next product, the Apple Watch, which it plans to ship this coming April (for more on the Apple Watch see my Influencer post How Will Apple’s Future-Facing Watch Change Your Business?).
How does a company such as Apple create incredibly successful innovations? And perhaps even more important, how can other companies emulate this success?
There are many reasons, of course, and lots of theories about how enterprises can develop an ear for exceptional product ideas.
An interesting one is that companies need to get better at exploiting the ideas that come out of unofficial projects, or skunk works. Peter Gloor, a research scientist at MIT’s Center for Collective Intelligence, has pioneered this concept. Gloor will explain more in a presentation at the MIT Center for Transportation & Logistics’ annual conference, Crossroads 2015, March 24, 2015, at the MIT campus, Cambridge Ma.
The vehicle used to bring these ideas to fruition is the Collaborative Innovation Network (COIN), says Gloor. It’s not a new concept; the famous American thought leader Benjamin Franklin used COINs to develop some of his innovations.
A COIN typically starts with a highly motivated, creative person, who is passionate about an idea. This evangelist recruits a group of like-minded allies – maybe three to 12 people – to carry the project forward. Once the initial, outlandish idea has been translated into a prototype, more like-minded souls are attracted to the project to form a collaborative learning network; the incubator for the COIN.
Networks like these are increasing in importance, maintains Gloor, and he foresees corporate structures becoming more cellular as employees come together via social media across companies and countries to develop their ideas.
Skunk work projects have produced some spectacular successes, the World Wide Web initially developed by a group of MIT visionaries is a notable example cited by Gloor. But by definition skunk works innovators toil away outside of official channels, and can find it very difficult to get the resources needed to ensure that their ideas see the light of day.
As someone who has created five companies and worked with many firms over the years, I have seen many worthwhile ideas wither on the vine. When originality threatens the status quo or runs counter to an organization’s culture, the individual behind the idea can struggle to gain traction.
Here are six road blocks to innovation that I’ve witnessed over the years.
Corporate (tunnel) vision. Is Nike a sport equipment or a lifestyle company? How about Zappos, is that enterprise a shoe e-tailer or primarily a purveyor of convenience? I would argue the latter in both cases. Nike sells lifestyle choices, while Zappos’ multiple product choice and free return service excel at providing a convenient buying experience. When employees in these companies think about new products and processes, they are not limited to the existing business model of selling sportswear or shoes, making it easier to think beyond the confines of traditional business categories. In contrast, companies that require employees to adhere to a narrow definition of the business model stifle the free thinking that catalyzes innovation.
Dense bureaucracy. Here, the impediment to innovation is a heavy-handed bureaucracy designed to ensure that the company adheres to certain processes and controls cost. This bureaucracy morphs into a system that supports the status quo and resists fresh thinking. The problem is often manifested in the “this is not how we do things around here” syndrome. Even companies that appear to be agile owing to their market dominance can still be lumbering giants when it comes to innovation.
Lack of leadership. Leaders set the tone of an organization, and if top managers are not comfortable with a cutting edge, less familiar working environment then the whole firm is likely to follow suit. These executives worry more about mundane details such as travel expense reports than corporate strategy. They also worry about their jobs, knowing full well that unlike competent managers and executives, no new and exciting jobs await them outside the current organization. Years ago management guru Tom Peters termed the stage that these executives reach as their “incompetence level.” These leaders ensure that there are no good successors waiting in the wings, because high-performing underlings are seen as threats. This is particularly important in young companies that need different leadership skills as the organization evolves beyond the start-up phase.
Lack of incentive. A company can talk up the importance of innovation, but if employees do not have appropriate incentives and rewards built into compensation systems, then the outcome is likely to be earnest words and little action. For example, procurement managers are in close contact with suppliers that, in many cases, bring innovative ideas forward in order to distinguish themselves in the market place (and can be major participants in COINs). Yet these procurement specialists typically focus on quality, capacity, and low cost; innovation tends to be low in their list of priorities.
The “not invented here” syndrome. Some companies find outside ideas almost repugnant. A supplier comes to them with an innovative idea for a new product or process, say, and the organization sets out to discredit the proposal. Often managers worry that their bosses will think less of them because they did no come up with the idea. In other cases this is not intentional. Bringing a supplier’s idea into a company requires a deeper and wider interaction with the vendor company, involving engineering, marketing, legal and other functions. Few companies interact with their suppliers on such a broad level.
Compulsion to clone. This problem becomes apparent during mergers and acquisitions. A buyer might acquire a smaller company because it values the target organization’s spirit and agility. Unfortunately, as the first order of business the buyer instills their own stifling organization on the acquired company, “because we need to have standards around here…” The smaller enterprise jettisons its identity – including those features that spawned the innovations that made the deal attractive in the first place – and becomes a clone of its parent. In effect, the imposed culture quickly extinguishes the spark of innovation in the target company.
There are many more obstacles on the road to innovative products and services. I would welcome your experiences of other idea-busting practices.
[i] ‘Staggering’ iPhone Demand Helps Lift Apple’s Quarterly Profits by 38%, Daisuke Wakabayashi, Wall Street Journal, January 28, 2015
This article was originally published as a LinkedIn Influencer blog post
More information on the Crossroads 2015 conference and registration form is available at: http://ctl.mit.edu/events/crossroads_2015