“Innovation squared”

On the 9th of December 2004, we already mentioned Jim Collin’s bright article "The ultimate creation", published by the Drucker Foundation in "Leading for innovation", probably the best collection of articles on innovation, with a list of authors which looks like the "who’s who" of management academia ; Clayton M. Christensen, Henry Mintzberg, Rosabeth Moss Kanter, Charles Handy, Arie de Geus… Jim Collins does not have the audience he deserves in France, and we suspect in Europe as well, although his last book, "Good to great" sold at more than 2 millions hardcover copies, and is still #1 on the long-running best-sellers list of Business Week (books which have been on the best-seller list for more than two years…). As Philippe worked last year at Insead on his next book, you can count on us for a few additionnal posts on Collins work !

What is Jim’s point in "The ultimate creation" ?

Jim Collins makes the distinction between "product innovation" and "social innovation", which he also calls "innovation squared". "Product innovation" implies your company either is a start-up trying to push a new concept, or is an etablished company trying to launch the next "big innovation". Jim Collins examples show that the first category (pionner status) does not mean sustainable economic success ; Diners Club, Visicalc are well known examples of companies which had trouble going beyond the pionner status, and to keep the leadership on the market they created. Second category is not in an easier situation ; companies looking for the next "silver bullet" seldom make it ; Apple’s i-pod is an exception, and Apple’s previous attempt, the Newton failure, make Apple a perfect example of a company focusing on product innovation.

For Collins, only "social innovation" can garantee a regular, and much more powerful, economic success. Discovering that the world most read management author thinks of "social innovation" as "the ultimate creation" will probably come as a shock to our French readers, but that’s the way it is ! It’s 3M people getting 15% "bootleg time" to work on the topics they like, Edison creating the concept of R&D lab, Procter & Gamble introducing employee ownership at the end of the XIXth century, or Henry Ford revolutionnizing owners/workers relationships.

If you try to understand 3M successes, you might think its innovation capabilities have a lot to do with luck. Art Fry, the co-inventor of the post-it explained that he had a creative moment in 1974 while singing in a church choir ; he struggled to mark the pages with slips of paper (which of course flew away at the wrong time) and though of bookmarks with adhesive. At that time already, 3M had a longstanding pro-innovation culture, and it translated into the "15 percent rule" which allows all technical people to devote 15% of their time on projects of their own choosing. So Art Fry was able to spend time on his idea, and he discussed with Spence Silver who had invented the right kind of adhesive. The post-it bestseller came out of this process ; it was the "15% rule", the social innovation, which made the post-it a reality, not really sheer luck.

Another time, another industry ; cars at the beginning of the century. Although the case is not mentionned by Jim, we trust he would follow us on this one. Some people think of Henry Ford as the inventor of the car, which is quite generous, as cars were already an old story at the beginning of the XXth century (the first successfull attemp of a motorised vehicle dates back to 1760, even if it used a different energy source). Others think Ford was successful because he mastered the "process innovation" ; by introducing the assembly line, he triggered the car industry economic breakthough. Henry Ford was the first to produce a car with a price tag of $850 in 1908 at a time when most other vehicles sold at around $2000. They’re closer to reality, but the ultimate explanation of Ford’s success is somewhere else. The assembly line at its beginning was a failure ; by the end of 1913, there were only 100 workers left at Ford factory for 964 people hired ! The key of Ford’s success was a social innovation. On January 5th 1914, he called three reporters to his Detroit plant and had his long-time partner James Couzens read the following statement : "The Ford Motor Company, the greatest and most succesful automobile company in the world, will, on January 12, inaugurate the greatest revolution in the matter of rewards for its workers even known to the industrial world. At one stroke, it will reduce the hours of labour from nine to eight, and add to every man’s pay a share of the profit of the house. The smallest to be received by a man 22 years old and upwards will be $5 a day". The average worker’s pay at the time was less than half that amount, and the Wall Street Journal called Ford a criminal.

Let’s avoid misunderstanding here ; we do not support hopeless approaches such as paternalism (which tries to assimilate employees as physical assets), or uniform state-led social innovation (which triggers no improvment for company-employee relationships, because companies are forced by an external agent to implement new rules).

3M, Ford, and many other companies (Procter & Gamble, Siemens…) went beyond product innovation ; they implemented social innovation and sent a powerful message to the men and women who took part to its successes. This message was ; "You’re more than employees".

Probably the contrary of today’s quoted companies ; on one hand they desperatly need ambition and growth, but on the other hand the management regularly sends the same message : "You’re disposables".

When is the last time you’ve talked to a friend who told you "My company’s management is great" ?… If a company cannot rely on its employees dedication, going for genius product innovations (silver bullets) is fine, if the company can reach it one day… But if you want to build an "innovation clock", such as 3M, an organisation which relentlessly comes up with innovations again and again, you have to go for social innovation, which is first about getting the best out of the men and women who devote a part of their live to the organisation.

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