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Executive Interviews: Interview with Michael Treacy on Innovation
November 2006
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By Dr. Nagendra V Chowdary
As a result, within their highly
sophisticated educational
apparatus, only the best and
brightest go into science and
technology. That is precisely why
GEN3 Partners is in Russia. We find
that they have at least the technical
capacity to be the very best. What
we then do is, in essence, reeducate
them around an innovation
capacity not technical capacity but
we find that these folks that are the
best of the best at science, take to
innovation methodology very well. -
You have observed in the article,
"Operational Innovation is rare. By
my estimate, no more than 10% of
large nterprises have made a seriouse
and
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successful efforts at it." And you
have also pointed out, "Operational
innovation is relatively reliable and
low cost." Why do you think the
effort rate is so low?Is it because they
don't see upfront the possible
benefits? Or is it that the leaders are
not well equipped to look at
operational innovation as another
platform for competitive advantage?
The major reason so few companies
undertake operational innovation is
that senior leaders are not familiar
with operations and they do not
recognize the strategic potential of
innovation in the area of operations.
As more companies establish
leadership positions through
operational innovation, I expect that
more companies will become active
in the area. -
You have remarked that, "it
(operational innovation) will never
get off the ground without
executive leadership. Yet senior
managers rarely perceive
operational innovation as an
important endeavor, nor do they
Interview 4
enthusiastically embrace it when
others present it to them. Why not?
The answers hinge on some
unpleasant characteristics of
contemporary corporate
leadership." What are these
unpleasant characteristics of
contemporary leadership? What
kind of leadership do you therefore
envisage for successful
fructification of operational
innovation efforts?
As I have mentioned in the article
(and in the previous answer), the
unpleasant characteristic is that too
many senior managers are distant
from and even uninterested in
operations and blind to its potential.
The reason for this is that many of
them have risen to senior ranks with
minimal operational experience. -
How should the need for
operational innovation be identified?
Who should spearhead operational
change initiatives? Should it be the
CEO or Departmental Heads or
Divisional Heads or respective
Functional Head?
Any company needing to sustain or
create an advantage in a tightly
competitive industry should consider
operational innovation. The effort
needs to be led by a senior executive,
though not necessarily the CEO. The
CEO needs to encourage the effort, but
we find it best that the actual efforts be
led by line business executives and
supported by specialists with
expertise in the field. -
What's the best way to foster
operational innovation in
companies? Should it be driven by
top-down approach or bottom-up
approach? Which of these two
approaches would extract
"passionate commitment" from
employees across the organization?
Bottom-up is unlikely to be effective,
since operational innovation requires
a broad perspective on end to end
business processes, which front line
people are unlikely to have.
Operational innovation requires both
the authority and broad point of view
that only senior executives possess. Does corporate entrepreneurship
play any role in fostering operational
innovation? What should be the other
institutional incentives to be
organized for better operational
innovation results?
Corporate entrepreneurship is a good
thing, but not the same as operational
innovation. The former is more
focused on creating new businesses,
the latter on finding new ways to
operate in existing businesses.
Operational innovation does need
incentives and supportive leadership,
just like any other change effort. What's the importance of
performance goals / targets in
operational innovation?
They are absolutely required.
Without them, no one feels a need to
make deep change and reinvent how
operations are performed. They need
performance goals that cannot be
achieved with the current process to
induce them to come up with
something new. What's the importance of execution
in achieving the desired results of
operational innovation? What are the
challenges in implementation?
Even the finest and most innovative
concept is of no value unless it is
implemented. Implementing
operational innovation, however,
requires a new approach to
implementation, one based on
learning and iteration rather than
precise planning. Operational
innovation is at its heart a form of
innovation, which is, by its nature,
characterized by uncertainty. How to overcome organizational
inertia to make operational innovation
a way of life?
Rapid early success with
organizational innovation is the first
step to overcoming inertia; when
people see that the approach works,
they become less skeptical. It is
important for the leadership team to
publicize early results and make a
public commitment to continuing and
extending them. It is also powerful for
the senior executives to make public
commitments to quantified
performance improvements that
cannot be achieved with traditional
modes of operation and so demand
innovation. What are your suggestions for
accelerating operational innovation
efforts?
First, the senior executives must set
aggressive time schedules in terms of
when results are required. Second,
those doing the work must adopt a
new style of implementation, which
foregoes detailed and lengthy
planning in favor of iterative
implementation, in which early
results are quickly achieved and
subsequent releases built on these.
1.
ICMR Innovation Case Studies
2. ICMR
Case Collection
3.
Case Study Volumes
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