The innovation challenge
Like an evolving organism, every successful business has to adapt to make the most of opportunities and defend against threats. The business must win profitable, sustainable positions with customers and must achieve the operational excellence required to support these positions . It must compete for customers, pricing its product to create value and to achieve a competitive return on funds employed. For the chief executive, this means constant sweat and effort to align the people, processes and organisation of the business in an effectiveand above all, profitableway to implement the strategy. It is easy to lose sight of the requirement to be profitable.
The need to be profitable underpins our approach to innovation. Value-for-money, profitable innovation is defined by the business and the customer. Innovating enterprises , therefore, pay relentless attention to improvement and value creation in a way that becomes an institutionalised capability. The challenge for the chief executive is to set the framework for the business to improve what is important, deliver the right bottom line and build capability (and ongoing profits) for the future.
Our experience is that to build a profitable innovating enterprise, a chief executive needs four things:
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a business opportunity that is of realistic and significant value (and the capital backing to realise it);
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an understanding of what types of innovation will create value for the business (in order to determine the right innovating approach or thrust );
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the right depth and breadth of managerial leadership for the current reality and future ambitions of the business;
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an understanding that strategy is implemented through organising.
In our experience, most chief executives want to lead successful innovating enterprises. Although not everyone can be a market leader or a first mover, most chief executives focus on finding ways to differentiate their companies from the pack. The main challenge is to define and execute the right innovating approach or thrust for the business (discussed in detail later).
Typically these strategies range from achieving flexible operational excellence (usually through continuous improvement systems) to significant progressive or step changes in product and process. Very occasionally a business will occupy what we call a white space (that is, a place of uniqueness in the market or an offering to customers that is unique and defensible).
The challenge for each CEO and their team is to find and craft the business and organisational strategy that will reshape the organisation and mobilise people in the workplace to build an innovating enterprise.
The rest of this chapter sets out our approach to these tasks .
