Innovation's Importance to Sustained Above Average Profits & the Role of Your People

I posted previously "What Innovation *Really* Looks Like" inspired by Seth Godin's innovation curve (at right). My post was picked up on FORTUNE's Business Innovation blog. A week or so later they featured a post from Innovation Creators, a new blog by Rod Boothby, a manager in Ernst & Young's Financial Advisory Services practice. Innovation Creators is an outstanding blog that now graces my Great Blogs list.

My post emphasized two things:

1) the importance of strategizing how you will endure the challenges between departure from the comfortable present and the point at which you can reap the rewards of your innovation: increased profits
2) the importance of listening to your people--they have what you need for innovation yet firms stifle them terribly!

As a blog, Innovation Creator's emphasis is:

Successful innovation is not about the ideas; it’s about the people. If you want innovation, you have to enable your innovation creators.

When most people talk about innovation, they rattle on about how to generate ideas. They use words like brainstorm. Most organizations are filled with people who constantly generate new ideas. The problem isn’t generating the ideas. The problem is three fold:

how to share enough information to generate useful ideas

how to motivate people to share their good ideas

how to make sure that good ideas are heard, fairly examined, and acted upon.

Boothby illustrates that "repeating innovation is critical to sustaining above average long-term profits" (at left) and acknowledges the dips that occur between innovations. I, personally, call these "investment dips."

Boothby says: "To generate innovation, companies need to focus not on the end product, but instead on enabling their innovation creators."

Helping companies proceed, Boothby authored: "Turning Knowledge Workers into Innovation Creators" This excellent paper is available on the Web or you can download his 38-page PDF version.

You owe it to yourself to read this piece.

There's one last thing I can't resist mentioning. In his chapter "The Solution: How to Bake Innovation into Your Organization's DNA" he states:

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This means telling your knowledge workers that, in addition to their current duties, you want them to become Innovation Creators.

This also means changing the way your knowledge workers are managed, giving them freedom to be innovation creators. Google Inc, for example, has taken the practical step of telling all its engineers to devote 20% of their time to a project of their choice.

Not every one of your knowledge workers will thrive in this new environment. Not all of them will have the drive to take the initiative, and work towards solving problems. Your organization will still see an improvement in innovation....To encourage those people who might step up to the role of innovation creator, you will have to work hard to publicize the success of other innovation creators. People need to see examples they can be inspired by and examples they can emulate.

The biggest hurdle will come from your middle level managers. The managers who wrongly believe that they derive their power and success from controlling information and from micro managing will not thrive in this environment. Managers who deliberately or inadvertently limit their employees by reducing their sense of ownership and by limiting opportunities to grow will not thrive in this environment. You will need to find out who these managers are. You will need to identify the managers who stifle innovation. You have to figure out how to get them to change their ways. If they do not change, in a competitive environment that requires constant innovation, these managers cannot help you. Not every one of your lower level knowledge workers has to become an innovation creator, but every manager has to facilitate innovation creation.
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As I read this, a couple things come to mind:

1) these managers (including partners) shouldn't be on the "bus" anyway if they aren't willing to correct these really unhealthy behaviors--prevalent in the CPA and legal industries

2) can you see how timesheets and billable hour goals are destructive to success with innovation? can you see why the true thought leaders in the professions insist firms must depart from these counter-productive practices if they are commited to optimal success?