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May - 2006 - issue > In My Opinion
Creating a culture of Innovation
Azim H. Premji
Wednesday, May 3, 2006
Innovation is personally very exciting for me and the most important differentiator for winning in the future, irrespective of what Industry we are in or what Product or Service we offer to the market. This is not new wisdom. We know that the single most important reasons why seemingly invincible companies either lost their significance or even disappeared off the face of the earth was lack of innovative thinking. Out of the top 500 companies that appeared in 1957 Standard and Poor’s index of the top 500, only 74 companies were alive in 1997. This means a life span of less than 40 years for some of the one-time leaders! This is even less than the career spans of the individuals who are part of them.

We have always believed that individuals may come and go, but organizations remain forever. This is another bit of conventional wisdom turned on its head!

Why does this happen?
In every market, at every juncture, incumbent companies dominate almost every industry. Established customer relationships, well-entrenched products, powerful brands, and significant scale advantages make these companies appear invincible to aspiring entrants. Yet, time and again, upstarts create a disruption in the market place —innovating on delivery, process, technology, organization structure, supply chain and more and changing the rules of the game and business models in a significant way. Initially, many of these changes start as weak signals. Being negative in nature, they are generally irritating. It’s easy for those riding on success to brush them off. Till, finally, the ground shakes beneath their feet and suddenly, they collapse. This is the story of every major game changer in the market, whether it is with transistors taking over from valves, talking movies obliterating silent movies, digital watches coming in or even personal computers taking over from minicomputers. The statement that “nobody would want a computer in the home” has been attributed to a minicomputer leader at that time. That company totally missed a revolution that was associated with one of the most important Innovations in the history of computers.

What really is Innovation? How is it different from creativity?
The simplest definition I have come across is that “Creativity is about thinking new things, whereas Innovation is about doing new things.” Innovation comes from applying creativity or applying thought. It’s about action versus just ideas. It is about implementation as much as it about design. Similarly, Innovation need not be restricted to products or technology alone. To me, Innovation applies to Innovations in business model as well as quality, productivity, service, financial discipline, employee attitudes and renewal.

Finally, Innovation is not just about incremental improvements in the course of daily operations or a one-off new brilliant idea. Innovation is a culture that needs to be created consciously and pursued assiduously by the organization.

How does one create a culture of Innovation?
First, we need to appreciate that all success creates its own “gravity.” It’s easy to believe that what has succeeded so far must continue to succeed in the future as well.

This builds up a kind of dominant logic that is comfortable to the thinking of the management. Any new idea will be pulled to the ground with the force of gravity. The first step therefore is to confront the gravity. If we can inspire everyone around us with an exciting vision, the feeling of complacency tends to come off. This can provide the “escape velocity” to counter the gravitational force. It will also create new energy to dig out and give life to many ideas lying buried beneath layers of bureaucracy!

Second, we need to constantly look for new ideas from everyone and everywhere. The customer is a good place to begin. We gather enormous data from the customer on satisfaction. We should also listen to new ideas from the customer. The customer can actually participate in his getting better satisfaction, provided we listen carefully to what he has to say and execute the solution well. Sometimes, we may have to restate what the customer has said in many different ways before we get a breakthrough. It’s a very useful process. The least we can get out of it is a more meaningful dialogue with the customer and the best is that we may come out with totally different ideas or insights.

Third, we need to actively bring in people who are not “clones” of people already inside the organization. We must have the courage to hire people that make us uncomfortable, including some we actually dislike. Hiring them is only part of the problem. But I have found that the real issue begins after that. If they are not protected, the rest of the system will push them out very quickly so that all can return to their familiar way of thinking and acting.

But such people can be invaluable in providing a completely different outlook.

Fourth, we as top management need to demonstrate our commitment to Innovation.

People hear what others say but act on what others do. The commitment must be intrinsic and go beyond just providing budgets and physical assets. We need to constantly reinforce the feel that we have to keep thinking differently if we have to survive and grow.

Fifth, I have realized that the day of the isolated innovator in a forgotten laboratory is over. We need innovators that can enroll the support of their colleagues and evolve their ideas over time. Support is absolutely necessary to take the brilliant idea off the ground.

Sixth, we must actually encourage our people to fight constructively over ideas once they have reached a certain stage. Fighting too early will kill the idea. But in the intermediate stage, this helps us to look at the ideas from various angles and bring out nuances that could be critical while implementing them.

Seventh, we must allow for creative failure when it comes to generating ideas. No one likes failure. But unfortunately, all evidence suggests that it is impossible to generate a few good ideas without a lot of bad ideas. As the Physics Nobel Prize winner Feynman said, “I try to fail as fast as I can.” That is the best way to move to a new idea. Failure should be forgiven and forgotten as long as the lessons are remembered.

Finally, we must have a clear process to communicate the directions and areas where new ideas are sought so employees can be realistic in their assessment of opportunities.
In the final analysis, Innovation is not about processes, techniques or for that matter just creativity. It’s about a spirit that engages the body, mind and heart. It’s about a new excitement that encourages one to think what no one else has thought and the courage to do things no one else has done. It’s about creating a better tomorrow. Innovation, thus, is a unique ingredient that can make our lives and professions worthwhile.

Excerpts from the keynote address at Nasscom 2006.
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