By Susan Twombly, Sept. 2009
Did you know that a recession can be a prime time for innovation? When creative ideas are encouraged and acted upon during an economic downturn, they can shift the competitive landscape – and change or even create new markets.
To find out why now can be a great time to innovate, HP.com spoke with Charlie Bess, an HP Fellow and one of HP’s foremost thinkers on innovation. Jean Lehmann, an HP Fellow and the Americas HP Services Innovation Lead, also joined us to talk about where to look for the best creative ideas.
HP.com: Charlie, what makes a recession such fertile ground for new ideas?
Charlie: Unlike flush times when investment money flows freely, economic downturns demand discipline, concise definition and efficient governance over investments. These same traits can be essential for powerful innovation because they allow organizations to focus activities on what they actually need.
HP.com: So, if you’re in a downturn, you can also really be in a state of readiness for innovation?
Charlie: Right, so take advantage of it. Economic declines also create more space for innovation because there are fewer distractions from operational issues because there are significantly less operations. There’s more time to focus on new ideas, products, innovative processes to keep the company relevant and vital. Also, there’s no better time to advance your competitive position, since any investment you make is amplified by your competitors being focused on just keeping things running.
Your competitors feel the pain of downturn, just as you do. Some will enter a state of inertia, jettisoning their innovative thinkers, putting innovative projects on hold and focusing on just trying to keep the lights on and operational activities. And when business reinvigorates, when we come out of the downturn, they must then compete against everyone else for the resources and play catch-up on the innovation front.
If you use the downturn to focus activities and resources on strategic ideas, you can enter the economic recovery with momentum, not inertia, and gain a long-lasting advantage over your competitors.
HP.com: It’s so tempting to freeze new initiatives until the economy picks up …
Charlie: It is. But, remember, many successful ideas have been hatched; many successful businesses have been launched during tough economic times. Texas Instruments and HP both started during the Great Depression. Microsoft’s PC-focused software emerged during the mid-‘70s stock market crash. Google’s search engine and eBay’s online auction model both prevailed out of the rubble of the dot-com crash.
While competitors focused on survival, these companies continued to invest, innovate, improve processes and emerged with a dominant technology that overwhelmed their competitors.
HP.com: How do you make a convincing argument for continuing or even increasing your innovation efforts when times are tight?
Charlie: The challenge is to innovate while you keep the rest of IT humming. It’s a delicate balance. We talked to some CIOs and their senior IT execs to learn how they’re doing it, and rolled their feedback into four essential steps that are key to enabling IT innovation. Step 1 is to focus on meeting some of the basic business needs first. One customer likened it to Maslow’s hierarchy of human needs.
HP.com: That’s the pyramid-shaped diagram with basic needs at the bottom and more aspirational needs at the top, right?
Charlie: Right. The point is, once foundational IT services are delivered consistently and you have the network, the email, and stable applications keeping the transactions flowing and delivering business value, you can then start climbing up that pyramid towards integrating information with business intelligence and, finally, IT services from a variety of sources that will enable competitive differentiation. So, think of them as pre-conditions for IT innovation. Step 2 is to make innovation an organizational priority.
It’s a big cultural shift for IT and it can also be one for the business, as well. You need to move the IT organization from reactive “order takers” to proactive innovators that can inject innovative ideas on how to use technology more effectively to deliver business value. To ease that shift, one customer created a formal innovation program. Each year, employees tackle a new business problem with the help of a team mentor. As a result of the program, they produced some novel technology solutions and reinforced that innovation was a corporate priority.
HP.com: That’s great.
Charlie: It is, but that’s not enough. Now that you have all the people thinking about innovation, you have to move onto Step 3, which is to earn the right to innovate. This is especially important when budgets are tight.
One CIO we spoke to reduced costs by a certain percentage in exchange for the right to have some of that money reinvested on innovative projects. In the process, they exceeded their cost-cutting goals. And, since they were viewed as business partners, both organizations made good on their promises and the reinvestments, since they saved even more money.
HP.com: If you get the green light to make innovation a priority, what are some things to keep in mind as you move forward?
Charlie: One is to not innovate just for the sake of innovation. So, the focus is on Step 4, which is to create value. The key is to identify the business problems and the technology you can use to address those problems, because solving business problems is key to bringing value to the company. It also builds trust in the IT organization’s innovation capabilities and makes people, within IT and the organization as a whole, sit up and take notice of the possibilities.
HP.com: It all goes back to aligning IT with business needs, listening and responding. Jean, you made that point in a recent article – the need to listen to employees so you don’t miss innovative ideas.
Jean: Right, the best ideas may be hidden within your enterprise. You have to look at each company and say, ‘Who couldn’t benefit from the ideas of its brightest people?’ Employee ideas can be powerful market forces and they’re the fuel for innovation.
HP.com: So, you’re talking about a real ‘grass roots’ innovation strategy.
Jean: Absolutely, employees are an often neglected resource for innovation. Frankly, if you don’t innovate, you’re going to fail in the marketplace. You need to tap into employee ideas, because they can be the difference between adaptation and annihilation.
But, it can be a little risky. With the current economic situation, workforces are often overtaxed, and they may see innovation as an additional burden. To prevent that, leaders must emphasize that innovation should be a routine part of everyday business life. Idea campaigns are essential to organizational success. But, even the most well-intentioned innovation strategies can fall short in implementation.
HP.com: What are some of the traps companies need to look out for?
Jean: We see three ‘traps’ – three innovation ‘don’ts’ that can really block success. The first trap can be the vagueness of the campaigns. They often come across as a classic suggestion box, where it’s very passive and employees aren’t sure what you’re asking for. It leaves you with a bunch of ideas that you have to sift through later, with very few having immediate relevance. Instead, you need to develop short, focused campaigns, usually a couple of weeks long, centered on specific targeted problems or opportunities.
Now, the second trap is when these time-sensitive ideas get caught in red tape. Often, you have too many steps or too many people evaluating each suggestion. These delays make employees think you’re unresponsive.
To avoid that, come up with ways to move ideas through the process as swiftly as possible. This way, enthusiasm doesn’t wane, ideas don’t lose viability. But don’t get locked into thinking of ideas at just the higher end of the innovation continuum, where you’re thinking about the next big thing, the next game-changing model or technology. Make sure your innovation program is well balanced, so you’re looking at these types of innovations, as well as incremental breakthroughs. So, you’re looking for the singles, as well as the grand slams. These small “quick wins” are faster and easier to obtain.
HP.com: They’re probably less likely to get caught up in the red tape, too.
Jean: Exactly. They can also help keep your enthusiasm high and employees motivated to participate. That leads you to the third trap, which is “lack of follow-through.” It’s a typical way to lose employee confidence. You must establish processes, therefore, to shepherd ideas through the innovation pipeline.
Recognize that idea contributors aren’t always the best idea implementers. So, you need to make sure you have that distinction between the idea contributor and the idea implementer. You need to identify some key people, responsible to see the idea through to completion.
And, finally, communicate your results. In fact, over-communicate your results. Keep your idea contributors apprised of progress at each step in the way. Also, evaluate your returns on investment, so you can get the best bang for your buck. And, track business impact to maintain the executive support that you require. Champion your cause: Continuously communicate that innovation is critical to overall success.
HP.com: Thanks, Jean that sounds like a great strategy. Charlie, do you have anything to add?
Charlie: Just this: Even in a downturn, you need to focus on the future –creating the future you want, as opposed to the one you’re stuck with. So, you need to continue your efforts to innovate. Companies that understand the importance of doing so can emerge from a recovery as winners, while their competitors are still treading water.