Is efficiency barrier to Innovation ?
Updated: Jul 1, 2021
Innovation and rapid organizational changes are the key to survival these days. That is why you will find Amazon start from ecommerce, then work on AWS, now working on Grocery online and luxury goods. Apple starts with computer, then moves to ipod then move to iPhone, starts Apple TV and now working on Apple cars. You will find same traits with companies like TATA, Google, Microsoft and so on. Achieving these changes is no joke and at times these companies have lost billions in R&D but the key thing was they never stopped trying, at least so far.
These make you wonder how THEY can achieve this and how come some of most efficient organizations fail and perish or gets acquired by a bigger fish.
The secret recipe is ORGANIZATIONAL CULTURE. While in efficient organization management craves Obedience and diligence from their employees, innovative organization ignites passion and creativity within their employees. If you cannot or are not allowed to ask a counter question then there is no innovation coming up. Trust me, these are not my words and this is not a theory. One of the world’s most revolutionary and influential business thinker Gary Hamel used American psychologist Maslow’s “pyramid of Hierarchy of need “model ( documented in Psychology 101) and applied that to Human capability and engagement in organization with absolute perfection. The results which came out of his research was eye opening.
In his book “Future Of management” Hamel talks extensively about need to innovate to stay relevant. He found 6 qualities of human capabilities and engagement in his research and they are as follows ( see the diagram above for reference and read from bottom to top)
1. Obedience – Taking direction and following rules
2. Diligence- Being accountable for work, sincere, hard working and not taking any shortcuts.
3. Intellect – Smart, eager to learn, willing to borrow ideas from others.
4. Initiative- Do not wait to be told and seek out new ways to add value.
5. Creativity – Inquisitive, Irrepressible, not afraid to say stupid things, challenge the status quo.
6. Passion – Climb over obstacles and refuse to give up. They see work as a calling to make difference in the world.
This research was picked up later on and published in Harvard business reviews and other thinkers and authors like Dr. Chip Espinoza who used this in his book “Managing the Millennials” to help 21st century managers manage the current workforce.
Hamel points out that in majority of organization we still have old school managers and leaders who loves the qualities 1,2 an 3 in employees while the qualities 4,5 and 6 are the ones which decides value creation by employees. He explains that if Obedience, diligence and intellect is all you are getting from your employees then your organization is bound to lose since these qualities can be easily outsourced to countries like India, China, Philippines, Indonesia etc. Hamel even measured contribution of each qualities and engagement level of employees to value creation post doing surveys across organizations, below are the results with respect to contribution of each qualities to value creation.
1. Obedience – 0%
2. Diligence- 5%
3. Intellect – 15%
4. Initiative- 20%
5. Creativity – 25%
6. Passion – 35%
This is one more reason why longevity of organizations have reduced to 15 years today from 90 yrs in 1935. Efficiency and innovation cannot be achieved at the same time, efficiency calls for minimal to zero mistakes, innovation calls for trial and errors. You can force someone to work for 12 hrs but you cannot force someone to innovate. You can give a deadline for a report or action plan but you cannot give a deadline to generate a new idea. The controlling and authoritarian approach to management once succeeded because of socio economic conditions of people around the world, even now in countries like China, India, Africa etc you can get away using these styles since the economic conditions of people force them to abide to the directions set by the leader. However if you see western world where affluence has come in society you cannot expect any longer expect quality 1,2 and 3, even if you get you basically get disengaged workforce who fails to innovate at the right time resulting in loss or closure of business. With the socio economic conditions in countries like China and India improving we have started seeing signs of disengagement here as well, we see labour protest in autocratic China and we see attritions in democratic India don’t we ?
Do remember efficiency cannot give you any competitive edge in the long run, it is like taking baby steps forward, any form of efficiency can be quickly emulated by others by cost optimization or outsourcing or talent poaching however innovation takes years to catch up and can provide your organization the giant leap forward that you always dream of. In order to innovate you may or may not need skilled workforce but you definitely need passionate and creative people and in order to attract these people you first need to set your culture right, set your management approach and expectations. So organizations need to think what they want, baby steps or a giant leap forward.
“Future Of Management” – Gary Hamel.