I’ve been thinking recently and have come to realize a striking connection between getting healthy and Open Innovation. One is about improving personal health and fitness and the other about the efficiency and competitiveness of our organizations.
As Alph Bingham and I write in The Open Innovation Marketplace (FT Press, April 2011), organizations need to be more lean, agile, and innovative than ever in this connected, global, hyper competitive economy. But why do we even use words like ‘lean’ and ‘agile’ in reference to business efficiency? It is because these powerful images of human health provide us with a shared vocabulary to help talk about the complex world around us and to relate it to our own experience and struggles.
Individually, we ask: Are we fit? Or are we strong enough? Leaders in organizations use the same language: What is the health of an important initiative? How do we drive business agility? Are we operating at peak performance? Deep down, we view firms as living and breathing organisms (the word ‘corporation’ actually comes from the Latin root for body) and the metaphor is a perfectly natural one.
I find this use of this language fascinating because the metaphor provides a clue to the difficulty companies have in adapting and remaining competitive. Individually, we all desire to be healthier which becomes more difficult as we get older. And while we all know the importance of diet and exercise, we seem to be heading in the wrong direction in many cases. So why don’t we do more to be active and healthy? Because it is hard. It is really, really hard. It takes enormous commitment and discipline and we are often not committed enough to follow through. We are trading off a difficult and uncertain future for gratification today. Sometimes there are other health issues to be sure, but overwhelmingly we opt for the here and now. We know the consequences. Often it takes a wake up call from the doctor to prompt real action.
Faced with that wake up call from the doctor (or that nudge from the loving spouse in my case ;) we go on diets and race to the gym. We may even make remarkable progress, and then we fall into the same old eating habits. Two weeks with a personal trainer and a box of protein bars won’t get the job done. After years of fad diets and easy fixes, we all know that only real lifestyle change will result in better health and long term benefits. And so go our organizations. We launch huge innovation initiatives, expand R&D, and create more bureaucracy. Then we decide we can’t sustain that, so we cut budgets and headcount, only to realize we’re losing market share to scrappy competition who don’t share our high cost structures. So we consolidate, restructure and realign. This cycle of bulking up and dropping weight doesn’t work … and it takes a toll. Just like our own personal health, companies need to behave differently and stick to the program.
In the case of companies, it may take a crisis. Perhaps losing market leadership, plummeting profits, or uncertainty in an uncertain economy will be the wake up call. Our firms are under siege by the competition and need to be more lean, agile, and innovative to survive. Companies need to change. They must re-engineer their businesses for the new economy and execute to that vision. Many organizations will wait too long to act, but they can always put themselves on the right path. They can envision what they need to be and begin building the capabilities and discipline to get there today. Just like the individual, they already have a sense of what they need to do: they need to challenge their cultural identities, drive efficiency into all their systems, and to innovate better than ever before. They need to excise NIH and embrace a world of possibilities. Shareholders deserve returns and companies can no longer do it all themselves. Looking further out, the most visionary companies will orchestrate networks and communities of employees, partners, users, customers, and markets to accelerate innovation, compress time to market, and drive economic efficiency. But they cannot do it without commitment, organizational fortitude, and fundamental change.
It’s not easy to have a lasting impact. No easy or halfhearted measures will change a company’s innovation performance for long. But organizations that commit to change and adopt open innovation principles will be more competitive in the future. Not halfhearted measures, but real cultural, behavioral, and structural change will transform firms into the lean, mean, innovation machines they deserve to be.