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Exploring the Relationship between Innovation and Productivity



Red and blue lights meeting in the middle

Back in February of 2018, I had the honor of joining my colleague Janice Francisco as a guest at the joint meeting of the Conference Board of Canada and the Conference Board of the US. The topic of our discussion was innovation and productivity. Janice provided a great summary of the overall conference below, here are the highlights.

Open innovation is increasingly adopted in large organizations

Large companies are realizing that is it often hard to be really innovative from inside an organization. Open innovation is seen as a way to circumvent the system and to bring in new thinking — particularly for more disruptive innovation — by partnering with start-ups or government funded programs. The key benefit of an open innovation approach is accelerated development and earlier commercialization in a less risk adverse environment. For example, this can happen by working with start-ups and supporting their research or by opening their campus to smaller and synergistic companies that can bring new technologies and ideas. Some of the open innovation challenges we discussed were around IP and confidentiality (however, there is a recognition that if there is no new product there is no IP), as well as scaling and reintegrating the ideas back into the organization. Overall, more organizations are now using or considering open innovation initiatives to get the speed, flexibility and removal of silos that are difficult to make happen internally.

Design thinking, lean thinking and other practices that encourage hearing and integrating users are becoming more main stream

These concepts are now being adopted more broadly in industrial companies (like chemical and manufacturing) that traditionally would utilize approaches like six sigma and focus on process innovation.

Here are some first-hand examples from other participants:

  • The CEO of an chemical company explained how his company has transformed by using a Voice of the Consumer (VOC) approach acknowledging that at ”every step we need to talk to customers to be sure we meet their needs” and that not listening to the voice of the customers is the #1 reason new products fail. For this chemical company, it meant that even scientists needed to “talk about the customer experience, not the molecule”!

  • One of the participant who had experience working with the Pentagon mentioned that often to move innovation forward it is necessary to shift some projects “under the radar screen”, a concept tied with the fast prototyping concept in design thinking

  • Teams from defense contractors who used to be very remote from their challenges are now participating in Hackathon style competitions (such as Hacking for Defense programs https://www.h4di.org/). This helps teams working on solving complex problem to work more quickly and using rapid prototyping and testing to get an immediate understanding of the value of their ideas which ultimately can lead to significant savings. Progressively the culture is bringing more of a customer mission centeredness to how they work.

  • Another chemical manufacturer highlighted how the use of story-telling and involving customers in their long-term scenario planning approach has been transformative: “what we want to do is to go and talk to customers about them…use story-telling to ask for reactions”.

Product versus process innovation

This was part of many of our discussions. Because of the relationship between speed and productivity, it highlighted the importance of doing product and process innovation at the same time otherwise, it may take too long and create cash flow issues.

Well-designed workplaces impact creativity and innovation

This was a fascinating presentation by our host, the architectural firm Gensler. A well-designed environment supports both individual space needs and community building, offering opportunities for random conversation and breakdown of silos. In a world where space is becoming multi-functional, everybody working or being social anywhere, personal and work time overlapping, space to support innovation and creativity has to provide social experiences, support personal needs (for example with concierge or dry cleaning services), and ultimately “giving employees a reason to come to work” as reflected in the stated goal of the new BCG company in Boston. At the end of the two days, there was an acknowledgment of how much these leaders have accomplished to move their organization forward more innovatively and yet how difficult it is to create this change. There is much more that needs to be learned and tried to create organizations where innovation AND productivity become core values. Ultimately, the winner is the organization that can create a culture that fully supports and embrace innovation as means for better productivity. What does or can your organization do to address the challenge of measuring and delivering innovation that is productive?

 
Janice Francisco’s Perspective

Exploring innovation and productivity isn’t for the faint of heart—our journey included looking at ways members have worked to drive speed, efficiency and effectiveness using agile and dynamic change; examining how members are striking a balance between the competing priorities to meet operational demand and drive innovation; and using foresight to create readiness for possible futures. The meeting started with a humbling analysis from a Conference Board of US economist. His key messages were alarming:

  • The global economy has been in a productivity crisis

  • Advanced economies are suffering from demographic shifts—older populations and decreasing birth rates are hurting productivity

  • Productivity growth has dramatically slowed down across the world and projected improvements look small.

This synposis is from her blog post. Read the full post here.



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