Innovation and Execution — A Critical Strategic Balance
By Thomas E. Ambler, Senior Consultant
Reprinted from Compass Points January 2008
Balancing internal and external forces that fight one another and create tension is at the very heart of strategic management. One of the most familiar and least pleasurable duties of a CEO is the role of “herding cats” in an effort to bring common direction to a management team whose jobs by nature tug in different directions and compete for common, limited resources. Nowhere is this conflict more pronounced than where short-term organizational health, aka “Execution” or operational effectiveness, inevitably meets up with long-term organizational rejuvenation, aka “Innovation”.
Most companies seek to gain competitive advantage by differentiating their products and services and/or their business model. This occurs through product and process technology innovation (R&D) and value innovation (e.g., finding a “Blue Ocean”¹). If your company is attempting to be highly innovative, you feel the dynamic tension and recognize that your organization is clearly composed of contradictory parts, much like the Duckbilled Platypus.
Here is its description:
“The platypus has a flat, rubbery bill, no teeth and webbed feet–like a duck. Yet it has a furry body and beaver-like tail, and nurses its young like a mammal. It walks with a lizard gait and lays leathery eggs like a reptile. And the male can use venomous hind-leg spurs to strike like a snake.”
Here is a creature that breaks all of the rules of birds, mammals or reptiles. Yet, it functions just fine for what it is intended to be and do. So, how would you characterize your company? Is it like a platypus or does it operate more like a pure bird, mammal or reptile?
Many companies define themselves as purely “bird, mammal or reptile” and win in the short term by tuning themselves to run like a top. They measure everything, benchmark their operation against world-class organizations and have an exceptional “Execution Machine”. Only startup companies define their mission to be strictly Innovation. Most companies, on the other hand, are some combination of Execution Machines and Innovators and have to deal with the “messiness” of two fundamentally incompatible worlds. Typically, the Execution Machine has the upper hand and the company’s Goals (e.g., urgent short-term financial results), means of conveying personal Status and rewards, Structure of power, systems and communication flow, and view and handling of Failure are designed primarily for Execution and not Innovation. This appears to have occurred even within 3M, historically the ultimate example in innovation, through its forced institution of Six Sigma as the centerpiece of corporate culture.
To counter this normal bias toward Execution and avoid treating Innovation as a stepchild, Thomas Kuczmarski² has developed an entire Innovation process, of which the following Creed is a key element:
- I believe innovative new products and services are integral to my company’s future success.
- I believe I control the future success of innovation for my company.
- I believe new-to-the-world products can be our most valued currency.
- I believe that internal innovation will yield greater returns than equally risky acquisitions.
- I believe long-term investments in innovation will yield profitable returns if managed correctly.
- I believe innovation will pay for itself and generate high returns if a balanced new products portfolio is maintained.
- I believe that the quantity of new products is as important as their quality.
- I believe new solutions to existing problems will provide big-hit new product opportunities.
- I believe that I am one of the biggest assets or most impenetrable barriers that can make or break innovation.
- I believe that an effective innovation mindset can motivate my employees to perform better and be more productive.
- I believe that the death or success of innovation lies directly in my hands.
- I believe that measuring return on innovation is as important as measuring return on equity.
- I believe that failure is an intrinsic component of innovation, and I accept that.
- I believe that maintaining a positive, proactive, and buoyant attitude about innovation is critical for morale.
- I believe innovation should be one of my top five priorities and remain on my to-do list.
Check out your beliefs relative to this list. If you can’t say, “yes”, to at least 10 of the beliefs, you are likely a barrier to achieving high levels of innovation. Ideally, the entire top management team will subscribe and live out this creed in a unified manner. But, of course, it is the consistent, sustained, proactive commitment by the CEO that is absolutely crucial for the success of Innovation in all companies.
Short and long-term success of your company is all about balance and trade-offs. Dynamically balancing the tension between Execution and Innovation through wise creation and management of goals, personal status, power structure and handling of failure lead to successful strategy.
References 1. W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy, (Boston: Harvard Business School Press, 2005) 2. Thomas D. Kuczmarski, Innovation: Leadership Strategies for the Competitive Edge, (Lincolnwood, IL: NTC Business Books/American Marketing Association, 1995)
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© Copyright 2011 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.
Tom Ambler is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at firstname.lastname@example.org