Everything You Need To Know About Strategy – A Baker’s Dozen Eternal Verities: Innovation

By Tom Peters

  1. Long-term, it’s a “Top-line World”: Is creating a “culture” that cherishes above all things Innovation and Entrepreneurship your primary aim? Remember: Innovation … not Imitation!

Flash: Jeff has halted Jack’s buying binge! Immelt is Jeff, CEO of GE. Jack is Welch, former CEO of GE. At the moment of transition, Jack apparently told Jeff to blow old (Jack’s) GE up. Jeff apparently lis- tened. Consider this from Business 2.0 in its July 2004 issue:“Welch was to a large degree a growth-by- acquisition man. ‘In the late ’90s,’ Immelt says, ‘we became business traders and not business growers. Today organic growth is absolutely the biggest task of every one of our companies. If we don’t hit our organic revenue targets, people are not going to get paid.’ Immelt has staked GE’s future growth on the force that guided the company at its birth and for much of its history: breathtaking, mind-blowing, world-rattling technological innovation.”

Love that: breathtaking … mind-blowing … world-rattling.

Now consider this parallel assertion from the most imaginative, free-thinking business commentator of the day, Seth Godin:“This is an essay about what it takes to create and sell something remarkable. It is a pleafororiginality,passion,guts,anddaring.Youcan’t be remarkable by following someone else who’s remarkable. One way to figure out a great theory is to look at what’s working in the real world and determine what the successes have in common. But what could the Four Seasons and Motel 6 possibly have in common? Or Neiman Marcus and Wal*Mart? Or Nokia (bringing out new hardware every 30 days or so) and Nintendo (marketing the same Game Boy for 14 years in a row)? It’s like trying to drive looking in the rearview mirror. The thing that all of those companies have in common is that they have nothing in common. They are outliers. They’re on the fringes. Superfast or superslow. Very exclusive or very cheap. Extremely big or extremely small. The reason it’s so hard to follow the leader is this: The leader is the leader precisely because he did something remark- able. And that remarkable thing is now taken—so it’s no longer remarkable when you decide to do it.”

“The short road to ruin is to emulate the methods of your adversary.”—Winston Churchill

Immelt and Godin (and Churchill) are onto something, even though they’ve traveled different roads to get there. We are assaulted by a siege of “me too” … at exactly the wrong time, at a time of profound and rapid change coming from every point of the compass at literally the speed of light over a fiber optic cable. It is thus a moment that cries out for profound innova- tion, from the CIA and FBI headquarters to the Corporate Boardroom. (Start innovating in the Boardroom itself … see above concerning board homogeneity.)

Cultural commentator Paul Goldberger, writing about retail in the New York Times Magazine, called this trou- blesome phenomenon “the sameness of things.” “While everything may be better,” he asserted,“it is also increasingly the same.” Barry Gibbons took over an ailing Burger King some years ago and made the same assessment Goldberger did. He called it “Nightmare #1,” or, more precisely,“When we did it ‘right’ it was still pretty ordinary.” Gibbons continues on a more general note: “I thought,‘What a dreadful mission I have in life.’ I’d love to get six-thousand restaurants up to spec, but when I do it’s ‘Ho-hum.’ It’s bugged me ever since. It’s one of the great paradoxes of modern business. We all know distinction is key, and yet in the last twenty years we have created a plethora of ho-hum products and services. Just go fly in an airplane. It could be such an enlightening experience. Ho-hum. We swim in an ocean of ho-hum, and I’m going to fight it. I’m going to die fighting it.”

Another prominent CEO would seem to agree with Gibbons. Soon after arriving at once premier innovator Hewlett-Packard, Carly Fiorina declared,“We make over three new product announcements a day. Can you remember them? Our customers can’t!” Likewise, a renowned industry analyst explained the dramatic incursion of the discount providers in his industry, “Customers will try ‘low cost providers’ … because the Majors have not given them any clear reason not to.”

And in Funky Business, Swedish business “strategy” professors Kjell Nordström and Jonas Ridderstråle ice the cake as they offer these trenchant observations: “The ‘surplus society’ has a surplus of similar companies, employing similar people, with similar educational backgrounds, coming up with similar ideas, producing similar things, with similar prices and similar quality. To succeed we must stop being so goddamn normal. In a winner-takes-all world, normal = nothing.”

These assertions, from a diverse set of movers and shakers, observers and prime movers, capture my sentiments exactly—and offer the unassailable case, as I see it, for a renewed emphasis on Fundamental Innovation. Or, recall per Immelt: breathtaking … mind-blowing … earth-rattling.

The problem: A “culture change” of the first order is requisite, from the Boardroom to B-school. We saw the boardroom is the ultimate “sameness of things.” And a recent examination of leading B-schools revealed that not a single one had a Core Course on … innovation. (Good God!)

But the problem manifested in the B-school curriculum starts much earlier. Consider this lament from Jordan Ayan, in his book Aha!:“My wife and I went to a [kindergarten] parent-teacher conference and were informed that our budding refrigerator artist, Christopher, would be receiving a grade of Unsatisfactory in art. We were shocked. How could any child—let alone our child—receive a poor grade in art at such a young age? His teacher informed us that he had refused to color within the lines, which was a state requirement for demonstrating ‘grade-level motor skills.’” (Good God … redux.)

The implications of a perverse set of educational incentives are all too aptly summarized by Richard Farson and Ralph Keyes in Whoever Makes the Most Mistakes Wins:“Thomas Stanley has not only found no correlation between success in school and an ability to accumulate wealth, he’s actually found a negative correlation.‘It seems that school-related evaluations are poor predictors of economic success,’ Stanley concluded.What did predict success was a willingness to take risks.Yet the success-failure standards of most schools penalized risk takers. Most educational systems reward those who play it safe. As a result, those who do well in school find it hard to take risks later on.” (Uncle!)

In the face of an enormous set of challenges, from uncertainty induced by the threat of terrorism to the dramatic rise of India and China as competitors, only a national (from the classroom to the boardroom) com- mitment to re-kindling the flames of “mind-blowing,” “earth-rattling” Entrepreneurship and Innovation will change the odds currently stacked against continued U.S. economic dominance.

Bottom line: No promotion to senior levels of pub- lic or private ente rp rise should ever again be granted to anyone who does not present a CV saturated by a clear and compelling demonstration of sustained com- mitment to Radical Change. Do we wish for “good strategists”? Why not! But the heart of the mat ter goe s far beyond any plan, no mat ter how brilliant. The heart of the matter is Heart & Will … a re co rd of upsetting apple carts, dislodging “establishments” and funda- mentally alte ring deep-roo ted “cultures” to embrace change of the most primal sort. I titled my most recent book Re-imagine! Business Excellence in a Disruptive Age. “Excellence”in a“disruptive age”is not excellence amidst placid waters. The notion of excellence itself changes … dramatically. We need our public and private Churchills,leaders who can re-imagine, who can call forth wellsprings of daring and guts and spirit and spunk, from one and all, to topple the way things may have been for many generations—and who inspire us to venture forth into today’s and tomorrow’s whitewaters with insouciance and bravado and determination.

“Acquisitions are about buying market share. Our chal- lenge is to create markets. There is a big difference.” —Peter Job, former CEO, Reuters