There is no such thing as a sustainable competitive advantage any more, says Soren Kaplan, and the only competitive advantage you have as a business is in your culture.
Culture, says the author of The Invisible Advantage: How to Create a Culture of Innovation, can be the "rocket fuel" or "death knell" of an organisation's ability to grow and thrive. The knack is in providing a framework to this "organic process", without making it over-structured.
Kaplan should know – he led internal strategy and innovation at HP before founding InnovationPoint, a think tank and consultancy that works with Fortune 500 companies such as Disney, Red Bull and Colgate-Palmolive.
The book is well-paced, with an easy flow. Kaplan argues for the need for disruption, as well as the need for other types of innovation, from incremental to sustained. What is a sustained innovation? Trying something that “feels like a big stretch”, he suggests, then just seeing what happens.
Ensure a balanced, “portfolio” approach to innovation, he advises, rather than only going for the big bets or getting stuck in a “single-minded focus on the small stuff”.
Sometimes, in certain departments or job functions, innovation can simply mean process improvements or tweaks to current products. And while businesses tend to think innovation belongs with its products and customer-facing services, it can as easily come from human resources, finance or IT, says Kaplan.
But a true culture of innovation must come from an organisation’s leaders, he warns, and people must have the mindsets and skill sets to innovate, whether that means providing open office spaces or more free thinking time.
The software company Atlassian encourages “FedEx days” – days off for staff to work on problems or ideas, with the caveat that they must deliver something of value within 24 hours, just like FedEx.
There must be the right structures and processes to enable collaboration – ideas Kaplan suggests include an innovation council or ensuring all staff deal with customers – as well as setting metrics, rewards and recognition, right down to a simple sharing and praising success stories.
There’s an Invisible Advantage questionnaire to assess your innovation culture, although Kaplan advises readers to also speak to their people. He provides an interview template for that too, as well as a full innovation toolkit online.
The Invisible Advantage is published in hardback by Greenleaf Book Group and is available from Amazon for $16.74.
Q&A: Suzanne Locke reveals more insights from Soren Kaplan's The Invisible Advantage:
Do businesses always intend to be disruptive?
Not at all, says Kaplan – Steve Jobs once said he had no plans to “redefine” the music business when setting up the iTunes Music Store, and Google was initially a site to find library searches for academic research paper, with no plans at the time to ‘transform the internet” with YouTube, Android or even online advertisements.
So has any business out there made a real success of sustained innovation?
Kaplan points to the stories of Kodak and Fujifilm. While Kodak was bankrupted and has now gone, after making a final play to break into the printer market, Fujifilm has a US$20 billion market cap after turning sustained innovation into a “growth engine”, he says, with dozens of new businesses from 3D photography to TV cameras and medical products. Taco Bell’s Doritos Loco Taco uses a giant Dorito tortilla chip as a shell – a “decent-sized experiment” that became an unexpected instance success, with 100 million sold in the first three months and $1bn sales to date.
How do you measure innovation?
There are many ways, says Kaplan, and you should measure what is meaningful to you – a McKinsey report shows that more than two-thirds of leaders want to make innovation a priority but only 22 per cent set metrics. Procter & Gamble began to measure and increase the percentage of new products using partner technologies. Externally driven innovation leapt from 10 to 50 per cent, with new products such as the Mr Clean magic erasers and Tide Pods. General Electric, meanwhile, highlights its 20,000 employee-filed patents as a measure of its innovation success.
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