ESSEC Knowledge Hangout: What Drives Organizational Innovation?

ESSEC Knowledge Hangout: What Drives Organizational Innovation?

With Yan Li and Xavier Pavie

Forbes Magazine recently named the world’s 50 most innovative companies. What key factors set the best apart from the rest? According to Forbes, a company’s ability to create and sustain innovation depends on their ability to leverage people, processes and philosophies.

To delve deeper into the question of how these factors drive business innovation, ESSEC Knowledge put together a panel of four experts. We were joined byYan Li, Associate Professor of Information Systems and Decision Sciences at ESSEC’s Asia Pacific Campus; Eric Olander, journalist and Vice-President of FBNC, Vietnam’s largest all-business news TV channel; Xavier Pavie, senior researcher and lecturer and Director of ESSEC’s Institute for Strategic Innovation & Services (ISIS); and Philippe Limantour, Ph.D., Director for the Cloud Computing Solutions and Services at CSC.

If you weren’t able to catch the debate live at the ESSEC Knowledge Google+ page, watch the video here:  

 

Here are some key points that emerged:

How does the behavior of leaders matter? What skill sets do innovative leaders have?

Yan Li began the conversation speaking on IT leadership and the key role that the CIO’s personality plays in the successful implementation of innovative strategies. “Our research [Matching business strategy and CIO characteristics: The impact on organizational performance, published in the Journal of Business Research] results showed that extraversion and openness – as well as educational background – had significant impact on the organization’s innovative use of IT and its overall impact on the productivity of the organization.” She added that this finding was of particular interest because, while demographics evolve, personality remains stable, giving personality an important role over the long term.

Eric Olander highlighted the importance of geographical culture:  “I just spent two years working in France, I’m now in Vietnam, I’m from America and I’ve found that introducing change can be more of a necessity in [developing economies]. You have to constantly change because the economy is moving so fast. In the United States there is a lot of talk of and celebration of change but people don’t actually execute.”

Xavie Pavie added to geographical culture the notion of corporate culture: it’s important to encourage the sharing of ideas within companies or else those bright employees with big ideas might go out, start their own business, and become the competition. He furthermore pointed out that we shouldn’t be too tempted to differentiate between CIO, CEO or manager. The overall culture of innovation within an organization is what’s important.

What is a good example of an innovative company?

With the launch of the iphone5, Apple has secured its place as one of the most valuable publicly traded companies in the world. Is it a big innovator? Despite its success, Eric Olander wouldn’t consider Apple as a good example of an innovative company. “Apple’s innovation is very tightly held by a small number of people, whereas Google opens up 20% of their engineers’ time to do whatever they want. The top management supports failure and it supports experimentation.”

Xavier Pavie cited the example of Starbucks. Its model allows employees to suggest innovative processes within individual stores and these processes filter out to regional managers etc. This is a good example of a company wanting to share the responsibility of innovation.   

How are technologies helping businesses stay ahead of the game?

Leveraging big data technologies to innovate marketing strategies is a big trend amongst larger companies today, explained Yan Li. “Our first Executive Education workshop here in Singapore [focused on] marketing analytics and digital platforms. This is something that everyone is talking about right now and it’s related to Cloud Computing. Through this workshop we’re trying to train individuals on how to leverage big data to better understand their customers and get better insight with data mining.” Where fifty or sixty years ago owners of local markets would know every one of their customers and understand their needs, today’s large super market chains are struggling to do the same. New technology is letting them leverage their big data to learn more about their customers, better target their marketing and create manufacture driven coupons, for example.

Philippe Limantour added that most innovations today rely on technologies. “I conducted a study one year ago looking at the way businesses were able to innovate and only 18% said their business was ready to innovate. They had ideas, but they were not able to put these ideas on the market because they didn’t have sufficient technologies.” With Cloud Computing Philippe Limantour explained that companies are better able to innovate because it gives them easy access to resources that would otherwise be more difficult to obtain. They can realize the good ideas sooner and suffer fewer loses with the ideas that fail. “Our role at CSC is helping people transform their business and a big part of this is to allow people to take risks. When you’re not willing to take risks, you don’t innovate.”

Continuing in the same line of thinking, Xavier Pavie pointed out that technologies are often simply a means for innovation or a tool to make available a service.” “When Steve Jobs presented the first iPod, it was really just a device not the main product.” The main product was the big money-maker – iTunes – and the technology behind the iPod was simply a means to bring this service to the clients.

When speaking about the philosophy behind innovation, we touched on the notion of Responsible Innovation. Is the incremental innovation philosophy often employed by big technology firms sustainable?  

Is necessity the mother of invention, or is it the other way around? Xavie Pavie noted that sometimes incremental innovations can become less sustainable in the long term. “In ten years, Apple developed more than 20 versions of the iPod. The question of responsible innovation is does this make sense?

” He went on to explain that responsible innovation can be understood through three main axes. First and foremost, the first axis of responsible innovation is the rhythm needed to answer consumers’ needs which brings into question the incremental innovation of many technology products. The second axis is about predicting the consequences of innovation. For example, did Facebook foresee how they would protect the data of their huge membership? Finally, he explained the third axis is about predicting the consequences on the lives of individuals, citing the example of low-energy light bulbs that are not actually ecologically friendly because their production requires the use rare earth minerals from China.

Eric Olander underlined however that it is important to remember that innovation is defined differently around the world. “Does Apple need to produce 20? Certainly for its shareholders it does. Do consumers need to purchase 20 different models? No. I feel there isn’t a universal truth on this and that gets even murkier where western cultures have moral structures that are entirely different, and the news on ecology and the environment are entirely different [compared to other cultures].”

Innovation means breaking out of the status-quo and introducing something new. Is it sometimes approached with apprehension by bigger companies?

Citing a quote taken from the Economists’ An A-Z of business quotations –  “Out there in some garage is an entrepreneur who’s forging a bullet with your company’s name on it,” Gary Hamel – we asked the question: do bigger firms approach the subject of innovation with a certain amount of apprehension?

While Philippe Limantour felt that a firm’s capacity to innovate was more a question of corporate culture than size, Eric Olander found some truth in the idea that big firms are slower to change. “As someone who has worked in smaller companies as well as large multinationals, I can say that large companies, by definition, because of their bureaucracy, are much less innovative. Even if you talk to people who work at Google, as the company’s gotten larger, the smartest people leave because they don’t have the flexibility anymore. […] though academia and the business press love to focus on the Apples the Googles and the Starbucks’, at the end of the day, they’re pulling their ideas from smaller entities.”

The ESSEC Knowledge Google+ Hangouts let Google+ users follow the debate live and ask their questions in real time. One of our viewers asked the question: “As a younger associate, sometimes it's hard to get your big ideas heard. Any suggestions?”  Yan Li’s advice was to try and show upper-management their return on investment. The contribution of an innovative business idea to overall business goals always helps to convince.  

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