How can a CEO support innovation in the company?

What role does the CEO play in building a strong innovation capability? What CEO behaviours will support a systematic and structured innovation process rather than an ad hoc one or jugaad?

Lessons from Ratan Tata

Let’s start with an example. By the end of his tenure as Chairman of the Tata Group, Ratan Tata emerged as a strong supporter of innovation. What did he do well, and where could he perhaps have done differently, or better?

Mr. Tata worked hard at building creative confidence in the teams he worked with. Whether it was his support for the Indica in the late 1990s or his frequent weekend visits with the Nano team in Pune, he continuously demonstrated confidence in the ability of his young engineering teams to find creative solutions to the different problems encountered along the way. He did not lose faith after the rash of post-launch quality complaints that clouded the launch of the Indica, or the safety-related incidents and market setbacks after the launch of the Nano. Mr. Tata demonstrated consistent support for projects that the group had decided to back. (For more evidence of this, see the account of Tata’s development of the supercomputer in Harish Bhat’s TataLog).

Mr. Tata’s demonstrated interest in innovation, particularly the time he spent on the Nano, had an interesting ripple effect. Other Tata group companies figured that innovation was a good way to attract the attention of the Chairman, and started ambitious projects of their own.

Under Mr. Tata’s watch, the group also put in place some group-wide structures to support innovation. Prominent among these was the Tata Group Innovation Forum that assembled leading evangelists of innovation in the group under a common umbrella. This Forum helped promote collaboration between group companies, identify fresh methods for the management of innovation, and share best practices. The power of this collaborative approach was demonstrated best by the Tata Swach water filter that used the combined expertise of Tata Consultancy Services, Tata Chemicals and Titan.

The second important group-level initiative was Innovista, the group-level innovation contest. This created a new competitive forum for group companies from all over the world to showcase their innovative efforts, and be evaluated through a rigorous methodology. A distinctive feature of Innovista is the “Dare to Try” award given to teams that took on challenging innovation projects yet failed in spite of their best efforts.

On the flip side, Mr. Tata’s intense involvement in, and support for, the Nano may have prevented him and his team from taking some dispassionate decisions that could have made a big difference to the fortunes of the product. As I have written elsewhere, unlike in the case of the Ace (Tata Motors’ very successful sub-1 tonne commercial vehicle), available evidence suggests that the Nano development and launch process was divorced from the market. Instead, many key decisions involving critical specifications and performance of the vehicle were taken by Mr. Tata himself. Given that Mr. Tata (though a car enthusiast) was far removed from the target market of the Nano, this may have accentuated many of the problems the Nano has faced in the market.

My takeaways from Mr. Tata’s tenure are that the Chairman / CEO can play an important role in building and sustaining creative confidence. A continuing and demonstrated interest in innovation can act as a spur to innovation. Setting up relevant structures that support innovation is another critical role.

But the Chairman/CEO should not get so closely involved in specific innovation projects that he begins to second-guess the market. Instead, he should support the use of appropriate processes and approaches that prevent the company from making costly mistakes. To build a process-oriented approach to innovation, TVS Motor CEO Venu Srinivasan reportedly refuses to take a decision on any innovation project unless it is backed up by the data and analysis required by the company’s innovation process.

Other Roles of the CEO

In 8 Steps to Innovation, we identified some specific roles that CEOs can play in making innovation a more systematic and structured activity.

Laying the Foundation

The CEO can play an important role in identifying the company’s innovation priorities at a given point in time, and ensuring that the company’s resources are directed towards addressing those priorities. When Jeff Immelt became CEO of GE a dozen years ago, he realized that his company had been very successful under his predecessor Jack Welch in squeezing out waste and inefficiency from the company under programmes like Six Sigma. Instead, Immelt identified his priority as re-igniting GE’s DNA as an innovative company. He therefore challenged his business heads to identify imagination breakthroughs – big ticket $1B+ ideas that could provide new revenue streams for the company.

When HCL Technologies CEO Vineet Nayar took charge of the company, he found that HCL’s image in the marketplace did not match what he believed was the quality and scope of work being done inside the company. He therefore challenged HCL’s employees to find new ways of communicating the value being created in HCL to analysts and other stakeholders in the investment community.

Understanding the Market

As managers go up the hierarchy, their day-to-day activities tend to get far removed from the marketplace. Yet, they have to take big ticket investment decisions on new innovations. It’s therefore essential that they find distinct and concrete ways of keeping in touch with the market. The UK retailer Tesco advocates the CEO (and other CXOs) spending at least a few days each year in a customer-facing role.

Professor Huggy Rao of Stanford recommends each CXO having at his fingertips the top three delighters and top three disgusters of every important customer segment in the company. This again helps them take the right decisions when it comes to innovation projects and programmes.

Create time, space and infrastructure for innovation

Employees need time and space to come up with new ideas as well as to translate them into prototypes and demos. The CEO needs to therefore make sure that this time and space is provided. The right place to start this is with his direct reports.

A related requirement is the infrastructure and training for innovation- infrastructure includes equipment for experimentation/ prototyping. The CEO also needs to ensure that there is support for learning and development initiatives that can spur and support innovation. One company where we have seen sustained support for innovation-related training is Titan Industries. When I coordinated a management development programme on innovation for Titan’s managers two years ago, not only did Titan CEO Bhaskar Bhat attend many of the sessions, he attended the reviews of all the innovation projects and also hosted a dinner for the participants.

Make sure that honest failures are not penalized

Experimentation is an integral part of innovation, and many experiments simply won’t work. In fact, if all the innovations in your company work as planned, your innovations are far too conservative. But, why would anyone work on these really challenging and risky innovations if they will be penalized for failure? One of the key innovation-related tasks of the CEO is therefore to see that “honest” failure is not penalized. We saw how the Tata group under the chairmanship of Ratan Tata introduced the “Dare to Try” award. In other companies ranging from 3M to GE to IBM, legends about innovators whose projects failed but were appreciated by the CEO give a clear message that it’s safe to fail in pursuit of a good cause. 

How to be a successful innovator within a company

We wrote 8 Steps toInnovation to help organizations build a capability for systematic innovation. But, how do our insights from the 8 Steps framework translate into action points for the individual who has the desire to be an innovator? [Here, my focus is on the innovator who is working in a company or other organization.]

Be curious

All of us are creative. But it’s not creativity but curiosity that is the trigger for innovation. A few days ago, some students from NIT Surathkal came to meet me. They are keen to get involved in innovation and entrepreneurship, but they don’t know where to start. I suggested that they look around for problems to solve. India has no shortage of problems that could provide the starting point for creative problem solving.

How do you find these problems? Whether you are working in an organization, or are a student, immerse yourself in the life of people, that’s the best way to find these problems. Pain, wave (current trends), and waste (wherever resources are not being put to good use) are good sources of problems that you can include in your challenge book.

A strong desire to do things “better” – faster, at a lower cost or with better features or performance - helps drive the curiosity for innovation.

   

One successful innovator whose co-creation we use every day is Art Fry (picture below). He is well known for the Post-it note – see how his curiosity led him to a very successful innovation.

Learn and practice techniques to “release” your creativity

While all of us have some innate creativity, we may express it in different ways – some of us in the kitchen, some of us through music, others on the sports field. How do we direct our creativity to problem solving in the business context?

Fortunately for us, there are a number of methods and techniques that can help us release our creativity. These include TRIZ, design thinking, Six Thinking Hats, and brainstorming. The internet has plenty of resources covering these techniques, and there are many organizations offering courses as well. But, remember that all these are aids to innovation, and need to be applied and practiced in the context of the problem you have chosen.

Focus your creativity on “relevant” problems

For innovators within organizations, I hope you don’t mind a piece of advice: it’s usually much more helpful (and less stressful!) to focus your problem solving skills on problems that are relevant to your organization.

During my visits to companies, I often hear complaints from employees such as: “I came up with an app to help farmers get market prices easily on their mobile phone, but no one is interested in what I have created.” But is this a surprise if the person complaining works for a company in the automotive industry?

All companies work within some scope of business that they have chosen. They target their (limited) resources to succeed within this domain. They are unlikely to support ideas that fall far outside this scope. The best way to avoid frustration is to work on ideas within the scope of the company or in nearby adjacencies. Otherwise, you will have a really tough (if not impossible) time convincing someone within the company to support your ideas. As you might have read, even companies like Google (which was famous for allowing employees to work on projects of their own choice for 20% of their time) have in recent months narrowed the scope of their attention to some well-defined domains and projects.

Participation in organizational innovation initiatives/contests can be a good way of ensuring that you are working on problems that are relevant to the company (provided, of course, that your company has given some careful though to the themes of the contest!).

Continuously experiment, try to validate your ideas at low cost

While most of us love brainstorming and coming up with new ideas, ideation is only one part of the innovation process. Ideas gain value when they can be demonstrated to work. Many ideas may in fact fail, and may need to be refined and improved upon before they solve a particular problem. So, a critical skill for innovators is the ability to design simple experiments that can help them see whether their ideas work. The ability to persevere with an idea is the hallmark of a successful innovator. Remember Edison’s comment about innovation being 1% inspiration and 99% perspiration!

Be open to ideas from others, build on your own

It is rare that a single idea solves a complex problem. Ideas become stronger when they are mixed, matched and refined by other ideas. Being open to other people’s ideas helps your own become stronger and better. Of course, while doing this, it’s only fair to acknowledge the contributions of others.

Very few ideas are fundamentally new. Often borrowing ideas from other fields and adapting them is a powerful way of solving problems. Remember that the design of complex financial products became much easier because people from Physics and Maths brought their skills and ideas to the financial services industry.

Make your idea sticky

I often find innovators in organizations frustrated by what they see as a lack of interest in their ideas. While one way to overcome this challenge is to work on organizationally-relevant problems, that’s usually not enough.

Many successful organizational innovators get traction because they manage to find a champion, a senior organizational member who acts as their ambassador and promotes their idea. To get such support, it’s essential to make your ideas sticky – you need to build a good story around your idea and find ways to creatively communicate it to others. The slide below gives some of the ways in which you can make your idea sticky.

Communicating your ideas well benefits from practice. So, as in the case of enhancing your creativity, work on this skill.

Contemporary management emphasizes the importance of networking. Try to build a strong network with others in the organization. Once you have built credibility and trust with influential members of the organization, it will be easier for you to get acceptance of your ideas.

Why we won't have a Steve Jobs from India

Two copies of Walter Isaacson’s biography of Steve Jobs have been on my bookshelf for close to two years now, but the size of the book deterred me from starting to read it. I didn’t think I was ready to read 570 pages about the enfant terrible, particularly after I heard that the book had several instances of his petulant and downright bad behavior. So, I must thank my colleague and friend Sourav Mukherji for giving me the impetus to start reading it. And, I was not disappointed. In fact, I spent two whole days immersed in the book, literally gobbling every word in print (yes, I still read books the old-fashioned way!).

As I was reading, one question kept popping up in my mind – could we have a Steve Jobs from India? The immediate trigger came from a recent interview in Mint with legendary tech investor, Vinod Khosla, in which he said that the environment for entrepreneurship in India is improving, and we could see a Facebook or Google in the years ahead. I have asked similar questions earlier, most prominently in one of my columns in Outlook Business.

What made Steve Jobs “Steve Jobs”?

I guess I don’t need to list Steve Jobs’ accomplishments here (Isaacson lists eleven instances where Steve’s products transformed industries! – see below). 

So, let’s jump forward and take a look at the man himself.

Steve had some distinctive characteristics: A keen sense of aesthetics; an eye for detail; an intuitive understanding of what makes for an outstanding user experience; a belief in simplicity and minimalism; an obsession with getting things right, even if that took more time and considerably more resources; a very strong and highly polarized opinion about anything coupled with the ability to change his opinion if convinced; strong self-belief; showmanship; ability to communicate and connect with an audience; the ability to “distort reality,” to make people think they could do “impossible” things in crazily ambitious timeframes; the perspective to combine art and technology to create well designed, high technology products for (a relatively affluent?) mass market.

Where did these attributes and skills come from? Was Jobs simply born with them, or did he develop these along the way? And, what external influences played a role in this process?

The Source of Steve Jobs’ Genius

Isaacson’s book offers some clues:

Steve Jobs’ (adopted) father Paul Jobs re-conditioned old cars and then sold them. He had a workshop at home where he spent hours in various mechanical activities. Paul also built anything needed for their home, from cupboards to a fence, himself. Steve learnt the importance of craftsmanship and focusing on the details from Paul. Steve’s obsession that whatever is invisible to the customer should be as perfectly designed and executed as what is visible had its origins in Paul Jobs’ attitude towards his own work.

Steve’s practical bent was helped by his early exposure to Heathkits (“do-it-yourself” kits for electronic products and amateur radios), membership of the HP Explorers’ Club, and an electronics class at school where students were encouraged to tinker around with a variety of electronics components. An area in which Steve exercised his ingenuity was in playing pranks on fellow students and teachers, leading to several punishments by his school. Jobs’ first “business” came from trying to “fool” the telephone system into making long-distance calls for free by simulating the tones that routed signals on the phone network, and then selling the box that allowed him to do this. (The box itself was designed by Steve’s friend and Apple co-founder, Stephen Wozniak, as were many other gadgets including the Apple II computer).

Steve had a spiritual side to him from an early age. This appears to have been partly driven by his endeavor to come to terms with his biological parents giving him up for adoption, and partly was a function of the times - Steve was a teenager in the late 1960s, a time of great political and social ferment in the US. This was the time of the anti-Vietnam protests, an interest in Indian spirituality and culture. This is when Ravi Shankar became famous, and the Beatles embraced Mahesh Yogi!. Steve spent several months in India connecting with different spiritual leaders, and this was the start of a lifetime interest in Zen Buddhism. His belief in simplicity and minimalism, and his ability to maintain a laser-like focus on a few priorities had strong links to this interest.

Isaacson quotes Jobs as saying, “I began to realize that an intuitive understanding and consciousness was more significant than abstract thinking and intellectual logical analysis” (p. 35).

Steve dropped out of college after a year because he didn’t like the regular routine and the mix of subjects he had to study. But the college allowed him to continue to attend courses of his interest for some time. It was during his stay at Reed College that he developed his lifelong interest in calligraphy (which played a big role in the graphics capabilities of the Macintosh), and took basic courses in design.

Why India won’t have a Steve Jobs

Very few of us in India do things with our hands. “Brahminical” India consistently ranks the brain and intellect over the hands and creative skills. So much so that even people from traditional craft backgrounds want to flee to white collar vocations. How many of us grow up with a workshop in our homes? No Paul Jobs-like inspiration is likely in our immediate environs…

Most Indian families would shudder at the kind of unstructured experiences that a young Steve Jobs had. Hanging around in another country for months in the quest of a spiritual experience? I can’t imagine anyone I know allowing their children to do that. And this is not a financial issue. So many of my friends and acquaintances are spending upwards of $200,000 educating their children in the US or UK. But they would go apoplectic if their children were to take a “break year,” let alone get an unstructured experience of the Steve Jobs type.

I was recently chatting with the fellows at Ashoka University’s Young India Fellowship (YIF)  Programme, an exciting postgraduate, liberal arts / critical thinking-oriented education initiative created by my good friend Pramath Raj Sinha. I was surprised to learn from many of them that they had a tough job convincing their parents that YIF was a worthwhile investment of their time! Recently, one of my acquaintances, a senior manager in a leading multinational decided to cycle from Bangalore to Hubli – by his own account,  his mother and brother made a considerable effort to dissuade him from doing any such thing. I am sure everyone has heard similar stories or faced related experiences…

Our whole system pushes people towards conformism. A good friend, HR head of a leading multinational, proudly told me over dinner recently that HR is good at getting people “in line.” And snuffing out enterprise in the process?

Are things changing? I was enthused to read about Akhil Mohan, a young student, who has become a passionate advocate of conservation after an interactive trip with the Bishnoi tribe in Rajasthan. But, how many of our young students get exposed to such experiences?

Conclusion

Of course, Steve Jobs’ success was not due to his individual genius alone. He grew up in the right place at the right time – Silicon Valley in the late 1970s was the centre of the personal computer revolution. As Amar Bhide pointed out so eloquently in The Venturesome Economy, customers in the US have shown a proclivity to try out products from unknown entrepreneurs that is perhaps unmatched elsewhere.  The US is certainly a more conducive place to do business than India – in Isaacson’s book, you won’t come across a single one of the typical constraints that a company in India faces. Steve’s colleagues and employees at Apple, Next and Pixar seem to have put up with a lot of his bad behavior, and I am amazed that in a country as litigious as the US, he got away with all this without a significant lawsuit against him

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But it seems clear to me that as long as we cloister and mollycoddle our youngsters, and prevent them from having a wider range of influences and experiences, our chances of ever producing a Steve Jobs from India are very dim indeed.

Need to Scale? Subroto Bagchi's "The Elephant Catchers" will almost get you there

I have always been amazed by Subroto Bagchi's ability to combine writing and active public engagements with a successful corporate career. More importantly, he is a good writer, and his books (The High Performance Entrepreneur; Go Kiss the World) have inspired thousands of young Indians to take wings and pursue their dreams.

But, from my perspective , his most important book is The Professional. The rapid growth of the Indian economy has meant that lakhs of young Indians have entered the workforce in the last two decades. But neither the Indian education system nor the Indian social system prepares our young people for organizational life. Subroto's book fills this gap with the most practical set of inputs that I have seen. Institutions of higher learning in India couldn’t do better than conduct workshops around the core principles that Subroto proposes in his book.

 Now, The Elephant Catchers

Subroto's latest book returns to his earlier theme of entrepreneurship but with a twist - this time his focus is on scaling-up and growth. What does it take to make a company scalable? How do your people requirements change? What about organizational values? And external branding?

There are aspects of the book that I really liked. I found Subroto’s candor about the Kyocera fiasco which led to a huge write-off and, ultimately, the departure of Mindtree founder and Chairman Ashok Soota refreshing in an era where the truth is often obscured by corporate spin. Mindtree acquired the whole team developing a new mobile handset from Kyocera on the premise that the new handset was going to be path-breaking and this would give Mindtree a leg up in the R&D and product engineering space (one of the areas where Mindtree has tried to differentiate itself as a company). However, Subroto describes how they made a major error of judgement, perhaps carried away by the exciting prospects of a step jump in that business. Readers who are familiar with our 8 Steps framework would readily see Mindtree’s failure to do any low cost experiments to test the key hypotheses or assumptions related to this new product, as well as the absence of a robust de-risking process as significant gaps in Mindtree’s process.

Another section that I found very useful is on building a sales engine. The best salesmen rarely make the best heads of sales, the skill sets and personalities required for the jobs are very different. When you hire an experienced sales head from another company, s/he will not be used to working alone and will require other people, data and support to be successful, so the total cost to the company is much higher than the compensation paid to the head of sales. And, most importantly, the individual who has been a sales head in another company may not be the best person to create and build a new sales organization. While the challenges in building a sales organization are well known, Subroto does an excellent job of illustrating these challenges based on Mindtree’s experience. This would be invaluable to any small company that aspires to grow beyond the efforts of the founders to build a sustainable sales pipeline.

Strategy, JVs, M&As, and other insights

Subroto makes several other important points in this book. The first is about “strategy.” In Subroto’s view, you don’t need a strategy unless you are seeking a significantly higher growth rate than the industry. While I agree with him that strategy is all about performing much better than the average performer, I would hesitate to connect strategy to growth alone. In my classes, I emphasize that the objective of strategy is achieving sustained, above average returns that exceed the cost of capital. While growth is one part of this, you need a strategy even if you want to achieve distinctive performance on other dimensions such as margins or return on investment.

Subroto emphasizes the important of the emotional connect of strategy. I couldn’t agree with him more - if you want people to get excited about the strategy they need to relate to it emotionally. That’s why a catchy story that communicates the strategy well is much more useful than aggressive numerical targets.

Subroto has interesting views on joint ventures. He is generally not in favour of them. I find it interesting that few Indian business leaders are very gung-ho about alliances. Does this come from a strong need for control? Or, an inherent distrust of others?  Or, because Indian companies often lack a distinctive advantage that they can bring to the table? I haven’ seen any good research on this….

Subroto is skeptical about M&A’s as well. Of course, we know the global stats on the success of M&A’s are not good, and Mindtree’s experience seems to have been consistent with these! But, I wish he had also referred to research shows that the ability to do acquisitions successfully is a capability that has to be learnt, and that there are companies like GE and Cisco globally, and our own Bharat Forge and the Tata group that have over time developed the capability to do acquisitions successfully.

The chapters on how to deal with the media, use consultants and make corporate social responsibility (CSR) a core part of the company’s strategy don’t cover much new ground but are eminently practical and would be useful to the entrepreneur trying to scale up his enterprise.

Two Weaknesses

While the book is eminently readable and has a tone that is Subroto's very own, I found his coverage of two issues unconvincing, or at least lacking in details. In a way the two are related. If you read Subroto's earlier book, The High Performance Entrepreneur, you would recall how Mindtree decided on its core values through a consultative process with its stakeholders. Mindtree was conceived as a warm and caring company; its logo was designed by youngsters from the spastic school.

In The Elephant Catchers, Subroto describes how expertise, being businesslike and adding value became critical attributes as Mindtree tried to scale. This led to a re-definition of Mindtree’s core values as well as a change in the external branding and positioning. But the book doesn't tell you how these changes were effected in the heart and soul of the company. If merely re-stating values changed organizations, change would be child's play. Similarly, for a brand to be successful, it has to be much more than external communication – customers have to experience the brand for themselves in every interaction with the company. But the book doesn’t complete the picture on these points.

From discussions with him, I know that Subroto has very sophisticated ideas on organizational change. He even played the curiously named role of “Gardener” for a few years in which his focus was on building the next generation of leadership at Mindtree. In The Elephant Catchers, he describes how individuals need to scale along with the company, and if they fail to do so they may not be a part of the longterm plans of the company. But, somehow, he hasn’t tied these different threads together, and hence the reader doesn’t get a holistic picture of the change process.

But, I would still recommend this book for its useful insights and triggers for fresh thinking, and above all for an opportunity to hear first-hand from one of the best business storytellers of our time.