Innovation is too important to be left to insiders

One of the things that makes entrepreneurs more interesting to the general public than traditional corporate types is the belief that they are all about innovation. And, since innovation is usually seen as closely akin to invention, with all the excitement that brings, this is naturally more appealing than big business, where – truth be told – most people have little idea what goes on.

However, as is often the case these days, it is a little more complex than that. At least on their upper floors, big businesses are likely to be just as obsessed with innovation as their smaller counterparts. Such factors as technological disruption, stubbornly low growth rates in many economies and continuing political instability in many regions previously seen as future centers of prosperity have combined to create as tough a business climate as many can remember. Desperate times call for desperate measures and so innovation has become the rallying cry for organizations seeking to escape the confines of this low-growth world. Management consultants, business school academics and, above all, book authors are urging everybody to innovate their way out of trouble. Indeed, one book title “innovate or die”, has become something of a mantra.

Although this seems a sound idea, it may create problems of its own. David Hickie, an expert in consumer products research and development at PA Consulting, points out that “so many companies turn to innovation as a solution to strategic challenges” that there is a danger of innovation tyranny. Stressing that innovation has a place in “a healthy balanced diet” in business, he says that attention should also be paid to other elements, such as quality improvement, cost reduction and organic growth. But, such is the importance attached to innovation – especially in the higher echelons of organizations – that it can soak up a lot of time and resources at the expense of the other activities. Nor is that the end of the problem because a lot of this effort can end up being wasted – with resulting frustration and resentment within the business – for the simple reason that many companies are just not set up to favor innovation, particularly of the “break-out” variety required to make a difference these days. Businesses, particularly large ones, typically have processes that have been put in place for good reasons and with sound intentions, but they can act as constraints on the practice of innovation.

PA is highly unusual in that it not only urges companies to innovate but also helps them to do it. On a business park in the English countryside outside Cambridge it has a technology center housing 300-odd engineers, technicians and consultants helping clients across industries from electronics to healthcare become more innovative. While the uncertain business climate has increased the interest in innovation, PA has been focused on it since its origins in the wartime Britain of the 1940s. Along the way it has been involved in such wide-ranging developments as machines for detecting counterfeit banknotes and inhalers for asthma sufferers. Only last year it helped Better All Round win a prestigious award by taking Ora – the new “round kitchen towel” that can be detached with one hand – from drawing board to the shelves of the supermarket chain Tesco within 12 months. As there was no pre-existing production equipment available, PA developed completely new machinery and infrastructure to make the product at its Cambridge center.

So it is not surprising perhaps that Hickie should see the value in companies seeking outside help. As he says, “If it’s that important why spend all your time trying to do it yourself.” But he is a former executive with Pepsico and Unilever, both businesses known for innovation, and he understands the value of specialist assistance. Wil Schoenmakers, a colleague at the Cambridge center and an expert in fast moving consumer goods innovation, also previously worked in industry (at Procter & Gamble) and has a similar perspective. One of the issues he highlights is the tension between creating efficient processes and being open to innovation. There are different KPIs, he says. There is also the more fundamental divergence between the interests of senior managers, who typically drive break-out innovations, and those of middle managers, who, he says, “are not interested in learning from mistakes”.

Given all this, it is perhaps inevitable that clients of PA’s center and other innovation consultancies include some of the companies with the greatest reputations for innovation. Because they are experienced in it and have been successful they know what makes innovation – particularly of the ground-breaking rather than the iterative variety – happen. Above all, they appreciate the unusual blend of skills that specialist consultancies can bring together to good effect but that it would be uneconomical for even the biggest companies to have access to exclusively.

IDEO, the design consultancy centered on London and California but increasingly a worldwide operation, was until recently an organization really only known to fellow creatives in the business world. Since its beginnings in the Bay Area, it has had a hand in developing products as varied as the first Apple computer mouse, office furniture and healthcare products. From the start, it has prided itself on taking a “human-centered approach” to helping organizations of all sorts innovate. To this end, it makes much of its policy of having engineers, designers and software developers working alongside behavioral scientists and other “soft skills” specialists. Clients include such industrial heavyweights as the likes of 3M, Ford and General Electric as well as financial services businesses, healthcare companies and public-sector bodies.

The idea – as championed by president and chief executive Tim Brown – is that by adopting the philosophy and techniques developed by IDEO over the years all sorts of organizations can integrate “design thinking” into how they do things and so become more innovative on a routine basis. As part of this, IDEO is increasingly paying attention to formalizing how it does things and so putting itself in a better position to help clients envisage how they will look in the future. While some might feel that such an approach would enable organizations to innovate without outside existence, there are signs that the opposite might be true. If executives are more alive to the possibilities that fresh thinking can provide they could be more inclined to seek it out before their rivals beat them to it.

IKEA is a case in point. Its website makes clear that more than most furniture manufacturers it acknowledges the changes that are going on in how people live. For example, it offers products with built-in wireless chargers for phones and other electronic devices, while also doing something to encourage “green” living by installing electric car charging points at its stores and promoting new materials. But when it wanted to investigate a new approach to the design of kitchens it turned to IDEO. As Juho Parviainen, design director in the consultancy’s London office, explains, the two businesses – which worked with students at Lund and Eindhoven, universities with which IKEA has partnerships – wanted to move away from just developing new versions of existing furniture and appliances to examine how changes in behavior might create a need for a different kind of product.

The result – recently put on show in a pop-up shop in Milan, Italy – was a room centred around an interactive table that served as a cooking surface using induction, a work surface and a traditional table. In recognition of the trend for families to revert to smaller, more frequent food shopping trips that is having such an effect on supermarkets the team replaced the traditional fridge with self-refrigerating display units that prevented foodstuffs being hidden at the back of fridges and so wasted. In typical IDEO fashion, this idea arose from an insight gained by looking at how restaurant chefs organize their kitchens and decide what to prepare. “The chefs said the fridge should be the inspiration,” says Parviainen. “In people’s homes, fridges were far from inspirational.”

Continuing the theme, the designers and the students also came up with ideas for making recycling of waste and better use of water easier and more central to the kitchen. But IKEA – while keen to encourage manufacturers to look at coming up with different sorts of appliances – also wanted to avoid the impression that this was a finished concept. “IKEA was asking the question about what could be the function of the kitchen,” adds Parviainen.

Like Hickie and Schoenmakers, Parviainen has experience of industry. He took time out from IDEO to work in-house at IKEA. However, he returned after a couple of years, partly because he missed the insights that come from working with other consultants. Working somewhere like IDEO provides opportunities to see the connections between what can appear to be very different projects in different industries. For example, he recalls that the IKEA work was similar to an assignment he did soon after first joining IDEO 11 years ago. This was a project for the television channel HBO to envisage what entertainment would look like in 10 years. Both pieces of work took a similar form, he says. “You look at people things and try to understand latent needs, and you try to understand the technologies and how you can bring them together.”

The fact that more and more businesses are seeing the value in such exercises is testament to the fact that senior executives are much less likely than they used to be to see design as a luxury add-on. At the same time as they are seeing the whole innovation process as a business capability that can be mastered like any other rather than a mysterious process defying management they are realising that design can be an important differentiator. Mark Payne, co-founder of Fahrenheit 212, an innovation consulting firm with offices in London and New York, writes in his recent book How To Kill A Unicorn that design matters more to business and consumers than it ever has. “Design’s ascent has broadened and elevated what’s possible for innovators, and the consumers and businesses that are served by innovation,” he adds. While pointing out that many businesses have not yet worked out how to capitalize on design, he asserts that the pacesetters and start-ups are showing what is possible once executives realize that innovation is much too important to be left to chance. In a world where consumers both expect and appreciate good design and where competition is intense functionality alone is often not enough. “The products and brands that are winning in this crowded world aren’t just functionally strong; they have differentiation you can spot from a distance, feel up close and connect with on a deep human level. Products designed with great empathy and humanism become part of us,” says Payne.

Apple, of course, is the most obvious example of this. But there are others. The revival of the Mini car – once revered as a symbol of Britain in the Swinging Sixties before it became lost in a failing state-owned car maker – under BMW is one that springs to mind. In a world where disruption is the norm there is no reason why others cannot join or usurp these names. But executives are likely to improve their chances of success if they combine the skills within their own organizations with those in consultancies for whom thinking about innovation is as natural as breathing.