Organisational development
Can innovation be learned?
Sabine Walter, Head of network management consulting | coaching, in conversation with Dr. Patricie Merkert
Many companies have realised during the pandemic that competitive business models go hand in hand with innovation. The pressure to establish a culture of innovation is increasing. The question remains how to do this. In an interview with Dr Patricie Merkert, Head of Innovation & Technologies at E.G.O. Elektro-Gerätebau GmbH in Oberderdingen, Sabine Walter asked her the question: "Can innovation be learned?" The answer is complex and contains valuable tips for companies that want to become more innovative.
S.W.: Can innovation be learned?
Yes and no. I think a company can learn how to bring an invention to market that the customer will pay for. The prerequisite for this is that the company enables innovation by providing the appropriate culture of innovation for it.
Innovation needs a willingness to take risks.
This implies that the those responsible in the company are prepared to take certain risks and venture into areas where there is uncertainty, perhaps very great uncertainty. If this willingness to take risks is not there, it is very likely that a company will not be perceived as innovative in the market; even if it has many creative people and also does everything technically to drive innovation. The lack of willingness to take risks will nip anything outside the usual environment in the bud.
Innovation is the result of many factors
S.W.: How much creativity is in innovation? How much is process and structure?
For a company to be innovative, a whole series of factors must come together. Jay Rao and Joseph Weintraub, for example, have investigated this and summarised it under the heading "How innovative is your company culture? According to Rao and Weintraub, there are six key factors that characterise an innovation culture: "resources, processes, success, values, behaviours and climate". Because the first three factors are easier to measure, companies often focus on them. But the fact is that values, behaviour and culture, or the innovation climate, are at least as important.
What am I trying to say?
If a company wants to be innovative, it needs a culture of innovation that is reflected in processes, resources, values and a culture of fault tolerance. It needs a view of the future, and must know macro and micro trends. It must anticipate what will affect its market and business model in the future. Furthermore, an innovative company needs a well-managed portfolio. This only succeeds if it is able to move away from ideas or projects that will not be successful. Companies that want to be innovative need an innovation process and clear criteria to regularly measure the profitability of inventions and projects. And they have to cooperate with the "outside", catchword: "open innovation".
To come back to your question, creativity is also a building block for more innovative strength, but only one.
S.W.: You have already managed several innovation departments. What are classic lessons learned that you would pass on to other companies?"
Success factors for innovation
Innovation must be a management issue
One thing I have learned is: Innovation must be a management issue. If there is no top-down support, i.e. no one willing to take risks or invest in new topics, innovation will be stillborn. Even the best innovation leader will fail because of the internal hurdles if there is no clear commitment to innovation at C-level.
Success factors for innovation
For innovation, I need people with a growth mindset.
And the second key insight is, I need the right people, especially those with a "growth mindset", i.e. recognise and make use of opportunities. This implies that I have to look very closely at the profiles. There is research on this as well. It is well researched which characteristics and competencies people need in the different phases of the innovation process to be successful. And I need these people in my team.
And if I have people in the team I'm taking over who I can't even imagine coming up with a new idea, then there's no point in trying with them. It won't work. It's true that I can train methods. But for this training to bear fruit, the personality has to fit. I will never make good innovators out of people who always see the glass half empty.
Success factors for innovation
Technology must solve real problems
Another success factor is technology. You must solve real problems. Whereby "solving" in the sense of innovation does not always mean that a technological solution has to be found. Solving can also mean: "It doesn't make sense to continue working here, because we don't see any customer need here". Or also: "We are developing a new business model with "old" technology".
Companies often work differently. They have a certain technological solution, possibly already patented, and they try to force this solution onto the market. Only in the second step do they consider which problem can be solved with this technology. That is the wrong way. I have to understand the problem first and then figure out how to solve it. Because if I succeed in doing that, there is a much higher chance that someone will pay for my solution. But to understand the problem, I have to go out and see what is happening in the market. I don't understand the problem by sitting in my office.
S.W. You say: "I have to have my ear to the customer". Now there is this famous quote by Henry Ford: "If I had asked people what they wanted, they would have said faster horses." What does it take for companies not to implement 1:1 what the customer wants, but to think ahead?
It is about observing in an "unbiased" way, i.e. perceiving what is not obvious and explicitly expressed. When I observe, I have to be able to abstract and link. If I observe with a technological solution in my head, my perception will become very limited. I only see problems that fit the solution in my head. This hardly creates real innovation. That is why it is advisable to use tools and methods that help me to ask and observe very openly, such as with design thinking.
If Apple had asked its customers years ago: "Do you need a computer in your mobile phone?", most of them would probably have said: "No, we don't. We have a computer at home. We have a computer at home. And it's bloody heavy." But was there already a need at that time to be able to do certain things independent of time and place? Yes, there was. And this need was fulfilled by the smartphone. In the meantime, it is impossible to imagine our everyday lives without it.
Success factors for innovation
Regional for regional
One thing that global companies in particular have to internalise is that European engineering is not suitable for every region. This means that the likelihood of me innovating from Europe for Asia is quite low. So the motto is: regional for regional.
Success factors for innovation
Test, test, test ... get feedback from the market!
Even though I already touched on this aspect earlier, I would like to emphasise it again at this point: So that companies do not spend forever trying to develop the "perfect maximum solution" and then are surprised that no customer wants to pay for it, it is important to realise the big dream in small steps and to test it again and again along the innovation process. It is a fallacy to believe that one test is enough. Just because you have received positive feedback from the market once does not mean that the rest of the path to market launch has to be right.
Therefore my appeal: test, test, test. Get feedback from the market. Don't build the innovation process on opinions and gut feelings, but get the facts.
Success factors for innovation
Don't do it alone!
As a rule, the marginal area of a company is the field where a lot of innovation could be possible. But in very few cases does a company itself have the competence to develop this marginal area. That is, it must cooperate if it wants to innovate. And as a company, I have to treat the ideas that come from these cooperation partners just as equally as if they were my own. We Germans in particular find that quite difficult. Because we think of innovation first and foremost in terms of how we can protect our patents. But if we don't succeed in dissolving the attitude of "Not invented here", innovation will always be more difficult.
And especially when we think of innovations around sustainability, cooperation is imperative. You can't do the circular economy alone. You need partners, an ecosystem. And you need a form of cooperation that enables a win-win for everyone involved.
Success factors for innovation
Bury a "dead horse" as quickly as possible!
This is also a quality of successful innovators, abandon projects that are "dead horses" as soon as possible and yet learn from such projects and integrate the insights that can be gained from the project into other projects. These insights do not only relate to the technical solution. You can also gain insights in terms of the approach, test procedures or market approach. And learning is possible from all insights. This brings us to the next point, learning.
Success factors for innovation
No culture of innovation without a culture of fault tolerance and learning
Innovation is not about knowing everything. It's about continuous learning. And that brings me back to the people I need for innovation. They have to be people who are willing to make mistakes, to look at them and understand what has to be done differently next time so that exactly this mistake doesn't happen again.
Without mistakes and also without a culture of fault tolerance, there will be no culture of innovation. If I castigate everyone who makes a mistake, no one will be willing to take risks any more.
The learning culture another key element. This can be found in Agile work, for example, in the retrospective. It is important that everyone who has contributed to the project or project phase sits around the table at this retrospective and that the findings are not only made behind closed doors. Lessons learned should be presented in the company to enable joint learning.
Living a culture of fault tolerance and demanding a learning culture must also be a matter for the boss.
Success factors for innovation
Agile attitude and Agile tools support innovation
S.W.: You mentioned the retrospective. Hence my question: To what extent is Agile working mandatory to be innovative?"
That is a difficult question. I would like to answer it like this. The attitude behind Agile working and the tools that build on this attitude make it possible to react very quickly to change in the market and in projects.
And if nothing in an innovation project is certain, one thing always is: no matter how a project is started or what ideas are at the beginning of a project, if a company listens to the market, it will change its idea along the way. Either it throws it completely overboard or adapts it. And both succeed particularly well with an Agile attitude and the appropriate tools.
This is also evidenced by a Study by the strategy consultancy Boston Consulting Group. Every year, it looks at the world's top 50 innovators and analyses what makes these innovators tick. It is interesting to note that of the 162 companies that BCG has been studying for 14 years, only 8 are among the TOP 50 every year. These companies are Alphabet, Amazon, Apple, HP, IBM, Microsoft, Samsung, and Toyota. What is their success factor? Two things stand out: on the one hand, these 8 companies are clearly "committed" to innovation - its strategy, culture, processes and resources, are geared towards innovation. On the other hand, they are able to move extremely flexibly in a changing environment.
Agile means reacting flexibly, talking to each other, incorporating findings from these conversations into development in order to generate as much customer benefit as quickly as possible. No matter what we call it, the important thing is that we act this way. An innovation process, unlike a development process, has to be super flexible. And creating the space for that is what it's all about.
S.W.: When did you know that your heart beats for innovation?
(Laughs). That's a very interesting question. In ninth grade, I dreamed of a really big invention; to invent something that would change the world. Then I studied physics. But I only really hit it off at Mann + Hummel. There, as an internal consultant, I got an assignment from the innovation department. I was supposed to help them transfer more ideas to the business units. At that point, I started to deal intensively with innovation and to train myself specifically. In the process, I realised that networking and exchanging ideas with others is also very important for being innovative, so I was able to play to two of my strengths. Since then, innovation is my passion.
Conclusion: Innovation
There is no blueprint for innovation.
S.W.: If you were to summarise our conversation, what would you say?
There is no blueprint for innovation. The question is always how does a company position itself? If a company positions itself as an innovation leader, it has no choice but to bring innovations to the market. If a company positions itself as a cost leader, it has to innovate differently. Then it is not product or service innovations, but process or material innovations. Maybe a company won't even call it an innovation. Innovation does not always have to mean "breakthrough". The literature distinguishes between four types. There are innovators who make things new. There are those who do things right. There are the innovators who want to do things sustainably and there are those who want to do things now.
Ideally, a company can do everything. However, very few succeed in doing so. Therefore, the central question is: which innovator am I or would I like to be? When this is clear, a company knows what to focus on and can align its culture, processes and resources accordingly.
Innovation is a management issue. Developing innovative strength is a process. It lives from the innovation culture in which it is embedded and from the people who shape this process.
The person
Dr Patricie Merkert studied physics, obtained a doctorate in materials science and an MBA in parallel to her career. She worked in various industries as a development and innovation manager and, since November 2019, has been responsible for the Innovation & Technologies division of E.G.O. Elektro-Gerätebau GmbH in Oberderdingen.
