How Innovative is your Organization?

Organizations tend to lose their creativity and creative energy over a period of time. This is especially the case when the company makes mature products. So older the organization and more mature their products, the less innovative will be the company. There are exceptions but in general this observation holds good.

For example, take a look at the present state of Radio Shack - once it was such a vaunted company. But today it is struggling to survive. Radio Shack has been a mall based retailer and till date it does not have a strategy to effectively compete with big discount stores. The company is unable to change to this new paradigm - As a result it will suffer a slow painful death.
Ford, GM, Crysler - all the big three from Detroit are struggling today. These auto majors have spent enormous amount of money on R&D, and have lots of innovative ideas within their R&D groups - unfortunately these ideas are not being converted into products. Just look at their 2007 model cars and compare them with Toyota or Honda or VW.

When I see these companies, the phrase "Innovate or Perish" sounds very true.
In Indian context, "Innovate or Perish" is also true. Free market and global trade has forced Indian companies to be very competitive. Reacting to this change, Indian companies in general have responded favorably well - and have developed several business innovations to compete with the well heeled global giants. The best example will be Tata Motors (TELCO). The company is facing competition from global giants in every segment of its product lines and the company has responded through innovation: Tata 407 LCV, Tata Pickups, Indica, Ace, Indigo etc.

Among the dying & dead companies in India are those companies that failed to innovate: Hindustan Motors (HM), PAL, Standard Motors, Ideal Jawa, Coal India Ltd, LML, Koday’s, Syndicate Bank, Canara Bank, Vijaya Bank, Indian Airlines, and the list goes on.

It is in this context, a senior executive asked me a question "How do you know the innovation potential of an organization?"

It is easy to see if there are innovations in an organization. But in case of an old organization the potential to become an innovative organization may be there, but it may not be obvious at first. So this question set of a thought process - and developed this eight points to measure or gauge the innovative potential of an organization.

1. Defining Goals: See how clearly the ogranization has defined the goals & objectives. If the current goals & objectives are well defined and is easily understood, then the organization can also clearly define its innovative objective.
   
   
2. Generating Solutions: Pose a problem statement to the members of the organization and see how they generate solutions. If the solutions are novel and instantaneous then the organization has a great innovation potential. If the ideas are the usual ones, then pose a challenging hypothetical question which needs unusual answers.
   
   
3. Choosing Solutions: As a continuation of the above step, ask their management to choose solutions to the hypothetical solution. One can also see if the management’s risk tolerance in choosing the solution.
   
   
4. Implementing Solutions: A good measure of the organization’s innovation capability is to look at thier execution track record. See how the organization has executed various projects in the past. If these projects are successfully executed and implemented, then the organization has the ability to implement & carry through innovative ideas.
   
   
5. Conflict Resolution: The skills needed to reslove conflicts within the organization is vital for an innovative organization. If the organization in the past has demonstrated good success in conflict resolution - and does not have a adverseral approach with its vendors, employees and contract labor, then the organization has the ability to resolve issues internally.
   
   
6. Change Management: Innovation is often accompanied by massive changes needed within the organization and also changes to the business environment. If in the past the organization has successfully demonstrated its ability to manage change, then the organization is ready for innovation.
   
   
7. Recruitment Process: Innovation requires diversity. Having a culturally diverse workforce is a good sign. See how the organization is handling its recruitment process. See if the organization is open to recruiting people with diverse backgrounds. As a thumb rule, greater the diversity - greater the innovation potential.
   
   
8. Organizational Culture: Innovation requires stong individual leadership. The organizational culture which promotes individualism will also wmpower creative individuals and teams. Organizations which have a strict hierarchy in decision making - with the "boss" being the final authority often fail in innovation.

Closing Thoughts

These eight points give a good indicator of the organization’s ability to innovate. Often times organizations - especially old and established organizations are often assumed to be "innovation challenged". But if the organization demonstrates these eight points successfully, then the organization as such is ready for innovation and proably has lots in innovative ideas - but is being currently held back due to leadership issues.