The Transformative Innovation-Operational Excellence Dilemma

Posted on September 27, 2012. Filed under: Uncategorized |

Can an organization successfully pursue both transformative innovation and operational excellence at the same time?  A recent blog by Maxwell Wessel, a member of the Harvard Business School think tank, Forum for Growth and Innovation, suggests not.  The blog, Why Big Companies Can’t Innovate, is the first of a series of findings from research to develop and refine theories around disruptive innovation.

In his blog, Wessel suggests “Big companies are really bad at innovation because they’re designed to be bad at innovation.”  He then tells the story of baby food company Gerber’s failed innovation of “Gerber Singles,” a product for adults, as a means of illustrating the point.  He writes,

For those who would admonish Gerber for their approach to transformational innovation, it might be wise to consider that the company did exactly what it was designed to do: create operational efficiency. This deeply-rooted tendency goes all the way back to a corporation’s typical life cycle. In it’s infancy, it’s designed to bring innovation to the market. A start-up’s success is not gauged by earnings or quarterly reports; it’s measured by how well it identifies a problem in the market and matches it to a solution….But that’s not what life is like within a mature organization. When corporations reach maturity, the measure of success is very different: it’s profit.

For executives who want to secure growth through innovation, the answer lies in recognizing the limits of their organization and empowering groups to function with very different goals and operational metrics

Wessel’s blog suggests a paradox of the impossibility of having operational excellence and transformational innovation at the same time.  Mature organizations designed for operational excellence do not have the right environmental factors to cultivate a culture of innovation.

How does your organization manage this dilemma?  Can you dial up innovation processes and operational excellence at the same time?  Can you reconcile the pursuit of different goals, profit and successful innovation, at the same time?

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