I recently attended a web seminar and I’d like to share some of the things I took away from it. The speaker, a human resource consultant and former HR executive in the high tech industry, pointed out that countless successful corporate leaders understand innovation is the key to a company’s survival. He suggested that effective talent management was ultimate ductwork bringing innovation into organizations, big, medium and small, because innovation is created by people. And gossip.
He also revealed that certain companies in the high tech industry must innovate at extremely high levels or they may be ill-fated within the upcoming twelve months.
“How can that be?”, you say. Well, let’s take the high tech industry leader Intel for example. We all know that millions of computers are running Intel chips “on the inside”, so why is innovation key to their survival? Here’s what Craig Barrett, Intel’s CEO has said about innovation:
“Just to give you a simple example of my company, and what innovation means to us. If you look at our revenue in January of any year, and then look at the revenue in December of that year, about 90 percent of December revenue comes from products which were not there in January. That sort of innovation which is a total turnover of our revenue every year is indicative of what innovation means to us. You miss a cycle of innovation, your revenue disappears”.
While your business may not be as susceptible to a lack of innovation as Intel, is your company facing a potential innovation deficit? Are you taking steps to encourage more innovation?
Because businesses that think they have built a competitive advantage by being:
- The lost cost provider
- A rapid copier of products or services
- Protected through copyright or patents
- An acquirer of competing companies
- An incredibly strong product brander or,
- geographically close to customers or resources,
can no longer count on those to keep competitors at bay.
Jack Welch, the famed and fabled former leader of General Electric said, “If the rate of change inside an organization . . . is less than the rate of change outside . . . their end is in sight!”
So the only real answer is to become a continuous innovator which enables a company to constantly get unique, well branded products to market — first!
Since innovation is mostly about “people,” this competitive advantage is initiated through persistent attraction and development of people and processes that make your employees the most innovative in the world.
This will bring higher margins and profits, lower advertising costs (more viral/word of mouth), increased retention, less recruiting, attraction of the best suppliers, distraction of your competitors, better customer service, and process improvement.
Here’s some proof that innovative firms get dramatically more productivity.
The revenue-per-employee (RPE) for the computer industry averages $160,000. IBM almost doubles the average at $300,000. HP is more than three times better at $500,000
However, both are amateurs compared Cisco at $700,000 and Dell at $1,000,000. Wow . . . a company at which each employee brings in $1 million! And Dell is in an incredibly price sensitive, nearly commodity-level PC business.
So here are some tools for building a culture of innovation.
- Find your way out of ‘the comfort zone’
- Hire more innovators, not ‘inside the box’ thinkers
- Reward innovation
- Measure innovation
- Promote and retain innovators
- Get innovation ideas from external sources
- Eliminate barriers to innovation
“You cannot create a high return on investment doing what others are already doing . . . innovation is the sole way to survive”. — Henri Termeer, CEO, Genzyme, a leading biotechnology firm.
I know that by putting these “tools” out there for you won’t make you an instant innovator. It takes hard work and commitment. It’s a mindset and a process that begins with bringing the right people on board.