I have long contended that innovation lies at the intersection of creativity and diversity. My argument is that to get real innovation in an organization requires a well managed, diverse team of people, with the freedom to try new ideas and develop new ways of doing things. The problem as I see it is that most organizations are not organized or equipped to allow that level of innovation.
Gary Hamel, the author of the new book The Future Of Management, makes a similar argument. He suggests that the 20th century model of managing, undercuts the 21st century need for collaboration wealth creation and innovation. n fact, the 20th century model generates unnecessary complexity within an organization that virtually disrupts innovation. He goes on to say that most organizations today do not have innovation or adaptability DNA.
My favorite example of this point is a company that I have come to admire greatly. Johnson & Johnson Consumer Companies is an example of a well run organization with a strong inclusive culture. J&J is an example of a company not only espouses their values, but actually lives their values. The well-documented, J. and J. Credo is a living document that guides the decisions that J&J leaders make every day. Most of you are aware of the famous Tylenol scare in which Johnson & Johnson set a high bar for responding to a corporate crisis by recalling all Tylenol product when there was just a moderate to slight possibility that some of them may have been tampered with. It was a costly decision, but totally consistent with the Credo. Many of you may not be aware that that was not an uncommon occurrence. I can personally cite at least five other occasions, which did not get headlines like Tylenol, but which illustrate J&J’s adherence to its values. The most recent was their decision to withdraw their plans to purchase a company called Guidant. That decision was due largely to the fact that Guidant was found guilty of hiding the fact that their personal defibrilators were potentially dangerous to consumers. Upon review of that behavior (hiding the truth), it became clear that Guidant would not be a good match for the J&J culture, despite the potential financial benefits.
While I admire J&J’s culture and adherence to ethics, I also observe that J&J, like GE, Cisco, and other companies, is not designed for innovation. J&J’s business model relies heavily on its marketing and sales prowess. Recognizing the businesses that they are in, they pay special attention to entrepreneurial ventures that are generating new ideas that could be useful in serving medical providers and consumers of health and personal care products. Once J&J Thinks that the products are viable and a moderate market has been established, they buy the company. The obvious benefit to the acquired company is while they could produce sales of a hundred million for their product, J. and J. could produce sales of one billion. It is a model that works and takes full advantages of J&J’s strengths. It also illustrates why J&J is not likely to be a paragon of innovation anytime soon. Instead of growing through innovation, J&J just buys innovation.
I’m also a major proponent of using management as a catalyst for producing organizational success. When the remaining questions, as we move deeper into the 21st-century is, what problem was management. as we know it, designed to solve? Gary Hamel suggests that old-style management was designed to get people to serve the organization goals. That old model has to be replaced with one that asks the question. “How do we build organizations that merit the gifts of creativity, passion, and initiative, which are things that people can choose to bring or not bring to their work.
This dilemma is further complicated by the fast-growing new wave of employees called the Millenials. These younger people have been raised to believe that their contribution inside the organization should be judged simply on the merits of what you do not on your title, credentials, or providence. What’s an organization to do?
In a very selfish way, organizations need to begin with hiring talent and using that talent to make profits. That brings into question the old 20th century model of managing organizations. Talented people in the 21st-century are not likely to need, nor will they stand for traditional hierarchy. One thing that I have discovered is that most organizations pretend that they want to hire the best and brightest. In fact, all the evidence suggests that they don’t. The reason, of course, is that really bright, talented people are a pain in the behind. They don’t follow rules; they don’t want to honor the hierarchy; they question everything; they take action without permission; and, they take what they believe are reasonable risks. Let’s be honest, most organizations and most organizational cultures were not designed to accommodate these rebels. So, while organizations say that they want the best and brightest, in fact, they are looking for people who are good enough, and most likely to fit into the organizational culture. Before you jump to conclusions and think that this is a putdown, let me assure you I believe that it represents smart management. Having a bright person on your team who is not able to work with others is a disruptive factor. So, you have to do an analysis to determine if you want diversity and innovation, and if so, what adjustments are you willing to make so they can thrive in your organization.
Going forward, not many companies will be able to waste any of the human imagination and intellectual capital that they have. CEOs will need to abandon thinking that some few of their employees are clever and imaginative, but most are not. They will have to learn, like Toyota and others, that you can get the best ideas from ordinary people. Getting the best from all of your people, all the time is the result of the process we call Managing Differently.
The thing that really stops innovation in most organizations is risk. Many talented people don’t see risk the way others do. CEOs are terrified of any disruption that can put their quarterly earnings at risk. So, there is a gap between the radical rhetoric of innovation and reality. Diversity Management strategies, properly executed can be the catalyst that makes innovation possible. Even in those organizations which are risk-averse.
