/02 Companies fail to innovate
because it requires individuals to think differently, and often in ways that are counter to organizational culture and norms. Innovation implies difference, and difference is scary. Are organizations willing to stick their necks out? Usually, no.
Introduction For leaders of global
organizations, the writing is on the boardroom wall: companies in the post-2008 economy must re-engineer their workforce models to become the innovative organizations of the future. Organizational leadership and culture must reflect this focus if they wish to attract and retain a new (and soon to be dominant) generation of workers and to remain relevant in an increasingly aggressive and competitive global market. Innovation is the top priority of CEOs worldwide, because innovation means survival. In this paper, we seek to identify the ways in which leaders of engineering firms can rethink their workforce models in order to achieve sustainable product innovation, to drive aggressive top-line growth and increase the bottom line. /03
Bigger. Better. Faster. Stronger. Innovation
has long fuelled the engines of productivity and growth for nations and for businesses. Since the Industrial Revolution, machines, systems and infrastructure have helped to define civilization, enabling its advancement and prosperity. Each step forward has reinforced the population’s expectation that engineers will, in perpetuity, be able to invent products and processes that preserve our quality of life and, more recently, harness and sustain the resources required to power them. It follows then that, in the post-2008 business world, innovation – the ‘successful commercialization of invention’1 – is no longer a mere driver of corporate performance or a competitive advantage. Now, innovation is critical to an organization’s survival. Changing technology, consumer demand, blink-and-you’ll-miss-them product cycles, shifting markets and the ramping up of global competition, along with the lasting reverberations of the Great Recession, undermine the sustainability of any organization aiming to achieve growth via cost cutting, re-engineering or expansion into emerging markets. http://www.workforce.com/articles/the-new-recipe-for-workforce-innovation 1 /05
Bigger. Better. Faster. Stronger. /06
Post-recession businesses must embrace innovation to survive. They need to become proficient in the ongoing development of multiple innovations, and have the operational capacity to do so.2 This is sustainable product innovation and it is the lifeblood of the innovative organizations of the new economy. 20th Century Innovations 21st Century Innovations 1. Electrification 11. nterstate highways I 1. Energy conservation 12. nowledge sharing K 2. Automobile 12. pace flight S 2. Resource protection 13. ntegrated electronic I 3. Airplane 13. Internet 3. Food/water production 4. Water supply and 14. Imaging distribution and distribution environment 14. Globalization 15. ousehold appliances H 4. Waste management 15. I, interfaces and robotics A 5. Electronics 16. ealth technologies H 5. Education and learning 16. eather prediction W 6. Radio and television 17. etrochemical technology P 6. Medicine and 7. Agricultural 18. aser and fiber optics L mechanization 8. Computers 9. Telephone 19. uclear technologies N 20. High-performance materials 10. ir conditioning/ A refrigeration prolonging life 7. Security and counter-terrorism http://www.oecd.org/sti/inno/2368301.pdf http://www.engineeringchallenges.org/cms/7126/8275.aspx 18. Entertainment 19. pace exploration S 20. Virtualization’ and VR ‘ 9. Genetics and cloning 21. reservation of history P 10. lobal communication G 22. reservation of species3 P logistics 3 17. ustainable development S 8. New technology 11. raffic and population T 2 and control
Organizational barriers to innovation /08
If ‘innovation is the single most important ingredient in the modern economy’ (as The Economist put it), then engineers could be considered the chefs de cuisine. And yet, those companies in the business of innovation – engineering and technology firms – must contend with the same organizational barriers that frustrate progress in non-STEM businesses:4 • Risk-aversion on the part of management and investors • Low-trust organizational cultures that reject collaboration and creativity • Unilateral communication • Poor implementation • Lack of measurement (such as time to market, market share and numbers of attempts). In many companies, the economic downturn has all but snuffed out management’s encouragement of, and funding for, innovation. Widespread downsizing has increased individual workloads, to the detriment of time spent coming up with new ideas and innovative initiatives. And as a long-term pursuit that does not attract revenue, the default position on innovation seems to be that it is a ‘nice to have’, not a critical driver of growth and results. Content brief interview transcript 4 Over 40% of respondents in a recent survey by Workforce said their organizations are ineffective at fosting innovation
Organizational barriers to innovation /09
This is despite the proliferation of CEOs and leaders worldwide touting innovation as their firm’s top business priority, and creativity as the number one ‘leadership competency’5 in today’s business climate. It is also in spite of the proof that companies that innovate produce better results than those who don’t.6 Innovating the top line [or Innovation pays the bills] • After a culture of innovation • In 1974, 3M scientist Art Fry • The Campbell’s Soup was instilled at Proctor & came up with the Post-It Note innovation of ready-to-eat Gamble, the company’s during his ‘15 per cent time’, microwaveable soup opened value increased by more a program at 3M that allows up a $500 million market, than $100 billion and grew employees to use a portion of by creating a product that its consumer brand portfolio their paid time to hatch their was relevant to a whole new from 10-billion dollar entities own ideas. generation of consumers.8 to 22.7 http://www.innovationmanagement.se/2013/07/08/innovate-or-perish-its-the-new-business-reality-is-your-company-ready/ http://akgul.bilkent.edu.tr/inovasyon/EIU%20Cisco%20Innovation%206v%20070511.pdf 7 http://www.businessinsider.com.au/difference-between-creativity-and-innovation-2013-4 8 http://www.workforce.com/articles/the-new-recipe-for-workforce-innovation 5 6
Engineers shape the world /11
Businesses across the spectrum need innovation to survive. The weightier prospect, however, is that society relies on engineering innovation through continual design, upgrade and maintenance of systems, components and processes that address society’s needs. Yet between the corporate world’s seemingly endemic lack of organizational capacity to support innovation, and inherent flaws in many companies’ innovation processes, even the most talented engineer’s ability to achieve sustainable product innovation is challenged. In many engineering and tech organizations – including, according to a former employee, legendary bastion of innovation Google9 – once a product is green-lit, engineers must continue to manage approvals as well as remain responsible for its maintenance. Idea Discovery Research Development Innovation Process Source: Following HAUSCHILDT (1997), pp.19ff 9 http://www.fastcompany.com/3015877/fast-feed/why-google-axed-its-20-policy Invention Market Launch Exploitation
Engineers shape the world The
stage in the development cycle where a product is deemed to be marketable is the ideal point for the innovator to turn his/her attention to a new opportunity. For an engineer to stay involved beyond that point could stall the company’s innovation pipeline … and with it, its potential for growth and increased market share. Does your organization’s innovation process allow your engineers to focus on what they do best and help them pursue new ideas at the right time? Does your company’s organizational structure support or stall innovation? /12
04 The path to success
Innovation is the top priority of CEOs worldwide – but it must be more than lip service /13
The path to success Procter
& Gamble has the Clay Street Project. 3M’s 15 percent program spawned the Post-It Note. These are but two examples of formal innovation programs offered by corporate giants that rely upon innovation for massive growth. But for all the brilliant, disruptive innovations that these programs inspire, a business leader’s genuine and visible commitment to innovation across the organization can seed the culture of trust, creativity, collaboration and courage required to fill the product pipeline for the long term. According to www.InnovationManagement.se, an organization’s code for innovation is embedded in its ‘3 Ps’: its people, processes and philosophies.10 Leaders of successful companies encourage risk-taking as a learning exercise and embrace persistence. And they instil – as an organizational mission – the idea that innovation is everyone’s job, not just those in research and development. http://www.innovationmanagement.se/2012/11/07/rd-spending-returns-to-pre-recession-levels-finds-booz-company-global-innovation-1000-study/ 10 /14
The path to success Yet
even with the 3 Ps in check, and a balanced attitude to risk, persisting with an organizational structure that does not support a business’s innovation strategy will not see your business gaining ground in the fight against the globalized commoditization of products and services. Align your workforce model with your strategy for innovation, however, and your engineers will be free to move your organization into the big league. /15
Learning to fly /17 Counterintuitive
though it may seem, embracing failure as a learning experience is critical to successful innovation. Innovative companies take action in the face of the unknown, evaluate results, adjust their methods and try again, accepting failure as part of the innovation process. These businesses encourage innovators to be open about learning curves, and to use failures as springboards to success. Failing brilliantly • In the early 1990s, W. Leigh Thompson, chief scientific officer of pharmaceutical company Eli Lilly initiated ‘failure parties’ to commemorate excellent scientific work that nevertheless resulted in failure. • At Facebook HQ there are signs around the office with snippets of inspiration such as ‘Done is better than perfect’ and ‘What would you do if you weren’t afraid?’11 • When 3M engineers discovered that there was simply no market for the heatrepelling cover to protect car finishes from welding sparks that they’d designed, they celebrated having found something that was innovative and had its place.12 11 12 http://www.innovationexcellence.com/blog/2012/08/07/fear-of-failure-is-the-big-problem-not-failure-itself/ http://www.fastcodesign.com/1663137/how-3m-gave-everyone-days-off-and-created-an-innovation-dynamo Up to 90% of all innovations fail.
Learning to fly However, failures
that result due to a company’s persistent refusal to innovate, or its reticence to adapt to changing business conditions, as has been the case for Eastman Kodak, are a different story. Kodak repeatedly missed the opportunity to prepare for the disruption that digital photography – a technology it actually invented – would inevitably unleash on its film-and-paper photography model. The one-time global success story was reduced to bankruptcy and the object of a class action over poor quality printer product.13 http://www.forbes.com/sites/chunkamui/2012/01/18/how-kodak-failed/3/ 13 /18
From increments to disruption, and
everything in between During tough economic conditions it is often the innovators and future-oriented roles that are dispensed with first. Engineering has been seen as a skill-set that is ‘safe’ from downsizing, but the global uncertainty of recent times has proved otherwise. This has had three specific impacts on the role of engineers: 1. It has forced the remaining engineers inside organizations to wear multiple ‘hats’. Often, highly skilled and experienced engineers are asked to complete a varied mix of high- and low-value tasks across a broad spectrum of work. 2. It has delivered many specialist engineers into the contingent market where their skills can be accessed on a just-in-time basis. 3. It has reduced the time engineers have to focus on innovation, research and testing, and it has encouraged a more output-driven approach to engineering skill. Too often, engineers that were previously tasked with experimenting, innovating, and developing new products have been asked to refocus on repackaging existing designs and delivering incremental rather than ‘step’ change. The risk with this approach is clearly competitive. Leapfrogging a competitor focusing on incremental change is far easier than those investing in those large, resource-intensive step changes. /20
From increments to disruption, and
everything in between So, now that companies are beginning to re-invest in innovation in the engineering sector, the impact of previous downsizing needs to be specifically addressed. A key issue will be ensuring that senior and highly skilled engineers are placed back into the right leadership roles (and are given a mandate to match) so that they can focus on spurring innovation across all levels of their organizations. While it is true that innovation within the product cycle can often be driven by competitive forces outside an organization, we must not ignore the internal drivers too. Booz & Company’s 2012 Global Innovation Study suggests that forces inside companies are just as critical to turning the tide on innovation. In fact, they say that ‘the big leaps in science and technology … come from curious scientists and technologists working in a creative atmosphere with a rich exchange of ideas’.14 How organizations create this kind of environment, and how much support they provide it, will determine the value they obtain from their investment in engineering skill-sets. Providing your top engineers with the optimal environment for creativity means freeing them up to focus on what they do best – innovating. This will necessitate a rethink of your business’s workforce, including the support services they have around them to achieve what they are tasked with. http://www.innovationmanagement.se/wp-content/uploads/2012/11/BoozCo_The-2012-Global-Innovation-1000-Study.pdf 14 /21
/22 Companies need to reward
and recognize innovative thoughts and also accept and even embrace failures. Tactical tasks always consume strategic time and that’s why the two must be separated.
/23 How can we help?
highly skilled, specialized talent that can provide expert support in the form of: Partner with Kelly today for a managed solution designed specifically for your engineering business. • CAD support Visit kellyocg.com Over many decades we have developed proven workforce management solutions that deliver predictable results and minimize the unknown. Providing your engineering workforces with reliable, high-quality support services means that you and your top engineering talent can get on with what they do best: changing the world. We are in the unique position of being able to provide organizations with access to • document control • product validation and testing • reliability testing • sustaining engineering • software engineering • engineering lab management and support • engineering document management • bill of material construction and maintenance • engineering change notice control.
For more thought leadership go
to talentproject.com About the author Jeff DeWitt is the Senior Director of Engineering Solutions for Global Managed Solutions at KellyOCG. Jeff joined KellyOCG in 2009 and is responsible for the architecture of engineering outsourced solutions. Jeff holds a bachelor¹s degree in electrical engineering from Pennsylvania State University and a master¹s degree in systems engineering from the University of Virginia. He has over 25 years of experience in product engineering, manufacturing automation engineering, production operations, and quality management. About KellyOCG KellyOCG® is the Outsourcing and Consulting Group of workforce solutions provider Kelly Services, Inc. KellyOCG is a global leader in innovative talent management solutions in the areas of Recruitment Process Outsourcing (RPO), Business Process Outsourcing (BPO), Contingent Workforce Outsourcing (CWO), including Independent Contractor Solutions, Human Resources Consulting, Career Transition and Executive Coaching, and Executive Search. KellyOCG was named in the International Association of Outsourcing Professionals® 2013 Global Outsourcing 100® list, an annual ranking of the world’s best outsourcing service providers and advisors. KellyConnect is a pioneer in the set-up and maintenance of virtual workplaces. We have access to local talent via 440 Kelly-owned branches across the US. We combine this with the intellectual property of understanding how to deliver plug-and-play technology solutions (if you don’t have your own). Further information about KellyOCG may be found at kellyocg.com. EXIT