unleash the engine of innovation

As a Distinguished Professor of Organizational Behavior and Human Resources at the Stanford Graduate School of Business, Hayagreeva Rao has long-term in-depth research on organizational behavior and innovation, and is the author of a monograph on innovation, Market Rebels ( Market Rebels).

Professor Lao will come to Beijing in May to lecture on the module "Building Market-Focused Organizations" in the Senior Manager Course co-organized by CEConline Magazine and Stanford University.

In preparation for this course, CEConline magazine conducted a survey of Chinese managers around the theme of innovation and interviewed Professor Lao about the survey results and how Chinese companies should innovate.

Topic PK: Enterprise development, is innovation first or brand first?

Related Links: Which is the most innovative company in China?

What did you find from the results of the "Customer-Centered Innovation" survey (see sidebar "Customer-Centered Innovation" Survey)?

The survey results are a good indicator of the knowledge-doing gap. This disparity manifests at every level. For example, Chinese managers agree that customers are gods, yet only 42% of those surveyed said that employees in their organizations knew what customers liked and what they hated. This is the gap between knowledge and action. We realize that customers are gods, but we cannot treat customers as gods in our actions.

For another example, Chinese managers believe that it is important to let employees come up with ideas. 86% of the respondents agree with this view. However, 43% of the respondents believe that innovation is a matter of a small team. Innovation is everyone's business accounted for 45%. Either way, we need to engage as many people as possible in innovation. Notably, 73% believe innovation consists of small improvements. If you need small improvements, you need everyone involved.

Managers' Arena: Under the Financial Crisis, Is Innovation Still Needed?

Related links: How to get out of the shadow of innovation failure?

Are you surprised by this result?

No. It should be said that the survey results are similar to what I have seen in other countries. The so-called gap between awareness and action is widespread. Recognizing it, but not doing it in action, that's the problem.

There are many reasons for this problem. It's cultural first, but it's also about who you choose, how you train them, how you define work, how you reward people for their behavior. Second, executives need to realize that I'm not the brain of the company, everyone is a CPU.

You need to realize that we need everyone to put the customer first. You may not interact with customers very often, and if you make five mistakes, the customer may turn around and run to someone else. So you need everyone involved. This involves two aspects, one is customer-centric, and the other is contact with customers.

Many executives do not have direct contact with or understand customers. When innovating they are always worried about what to do if they fail. And if you want to innovate, of course you have to try. This is the time to test the company, how you deal with failed attempts.

Your new book, Market Rebels, talks about breakthrough innovation. How does it relate to the customer-centric innovation you just talked about?

In Market Rebels I discuss innovations and changes that have profoundly affected their industries. Breakthrough innovations that challenge the established culture of an entire industry are driven by activists inside and outside the industry.

When I discuss customer-centric innovation, I always emphasize that innovation is not just a product, it's a lot of things, including processes, including what you can do with your supply chain, including how you organize your company's internal structure, and Including distribution, channels, etc. The point I want to emphasize most is how managers can overcome innovation shortsightedness, the belief that innovation is product innovation.

I would also like to emphasize culture. Interestingly, when I ask managers what they need to do to encourage innovation, they always tell me that the first thing they need is metrics. Metrics are of course important, but first you need ideas, you need ideas. To get good ideas, you have to understand your customers. Where do you get ideas and ideas? You need to foster a culture that encourages people to come up with ideas. Who does the cultivation of culture depend on? It's about CEOs and executives, it's about managers.

Ideas, culture, they form a system?

Yes, but I prefer to call it an engine that drives innovation. You know what you want, and you want to keep getting good ideas in the organization. As respondents pointed out, it doesn't have to be a breakthrough innovation, small improvements are fine, the ones that improve the customer experience. Again, you need everyone to join in.

How to make this engine spin?

This will be covered in the course as well. You need to inspire people's desire to innovate. How to do it? You have to ask yourself how do I create an environment where people can ask questions and share knowledge and ideas. Another point is how to build trust between the employee and the organization. Next, how to make doing things fun.

You need to create a good emotional experience for your employees. That is to say, you must not only stimulate people's willingness to innovate, but also put the means and tools of innovation in their hands. Which tools? Tools to help people share freely, tools to evaluate ideas, tools to inspire and motivate people, and more. With that, what you need to do is get people to think about how things are going, you want them to feel trusted, that the innovations they're engaging in are fun, and you want them to feel confident. Confidence is very, very important. If a person has no confidence, he will not have ideas to come up with.

The above aspects are promising for managers of small and medium-sized enterprises. I plan to cover these best practices in detail in the course. One such example is an American company. They set up a stock market within the company. Each stock corresponds to an idea. Others can buy stocks. Buying more stocks means that everyone thinks the idea is good. Not only can people buy stocks, but they can voluntarily implement that new idea. This is a good example and there are many others.

Extended reading

The customer is the king and you are the prime minister——Democratic innovation based on users

The path of family business management innovation

Managers arena: "Kaixin.com" will always be happy only if it keeps innovating

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But building confidence is often difficult. Why?

The reason is that we all think bosses can fire employees. Of course the boss has such power. The problem is that in some organizations I see employees firing their bosses. why? Bosses don't think, don't try, don't care, don't do things. The boss said how should I motivate my employees? Do I have to give them a raise? In fact, the problem is not here. Managers need to think: what is my employee's experience here on their first day?

I'll give another example, an Indian company that has managed to create an atmosphere of confidence. The CEO of that company found himself a mentor, who turned out to be a 25-year-old young engineer. What's going on? The CEO often asks his son for advice on networking issues he doesn't know much about. One day he realized, isn't there anyone like my son in my company? That's it.

However, when a CEO asks a 25-year-old to be his mentor, what effect does it have on other executives? They will feel that I also have a lot of things I don't know, which is normal and I need help. And between CEOs and young engineers, not only do CEOs learn a lot from young people, but young people also learn a lot from CEOs. Things like this can have a big impact on an organization. It conveys the message that what matters is not saying, but doing.

This Indian company is doing well. Does the CEO's personal style matter, or does it work systematically?

It can be implemented systematically without relying on the personal style of the CEO. The key to making people confident is that it's not just the company's job, it's the employee's job too. The employee himself needs to realize that this is his own business, he needs to actively think about his career, the new skills he needs to acquire, etc.

And how to give employees confidence, you can start from the smallest, you can also start from the big. What is it to start small? When you get your product to customers, you can send employees to learn how customers use your product. This will give the employee the opportunity to get to know the customer and will also allow him to build a good feeling. What is the big point? If you want to be Bole, you must have potential employees, evaluate them, and give them projects to do. Doing projects is probably the best way to build confidence. Not only do they learn from doing projects, but you allow them to fail.

From the smallest to the largest, there are many things you can do to boost people's confidence. Interestingly, when companies hire new employees, they can't wait to assign them to the appropriate department. Maybe what we need to do is shift some of the responsibility for developing ourselves and building confidence to employees, telling them you're hired, go to your sponsor.

Do attitudes towards failure vary across countries?

I would say about the same. It's amazing how similar different countries are at this point. As is true in many countries, failure is punishable. You know what happened to the MTV TV channel in its infancy? CEO fires unsuccessful music producer. What does MTV do? What it does is songs. How can you predict which song will succeed and which will fail? You have to buy as many as you can, and many of them will fail, some will succeed, and some will be very successful.

What kind of innovations fail?

What doesn't interest customers will fail. So the first thing is to understand the customer. Knowing your customers is not about you asking what they like, it is about observing.

Another reason innovations fail is resistance. You need to understand this. People may resist innovation for a variety of reasons, because the product is not technically perfect, because the product is not cost-effective, etc. It is important for breakthrough innovation to rely on collective action to overcome this resistance. I have discussed this a lot in the book. I won't focus on the discussion in the course. What I'm going to focus on is how to make people do simple things. We can see that smart companies know how to make the complex simple.