Monday, April 26, 2010

The Innovation Dichotomy

Last month I visited a bunch of customers (existing and potential) on the US West Coast from various industries; technology, infrastructure, software and internet-related companies.

So here you have a set of companies who are considered to be the most innovative in the world. They thrive on innovation – make money off it, add value to the world around them, innovate on products, services, business models – you name it. Innovation is the name of the game - it’s what makes the Valley thrive. It would be reasonable to conclude that the ability of these innovative organizations to drive change and be comfortable with change is huge.

And yet, interestingly, their ability, appetite and willingness to drive change within some of their own processes is astonishingly low – like that of any regular company or even worse! While the business side of their organizations is constantly innovating and changing, it’s some of the “back-office” work (finance or HR for instance) that does not want to change. They seem to have a "this is the way we’ve always done it” mindset – which bothered me and got me thinking…how could these two worlds coexist?

So here’s my hypothesis:

In these companies its clear where the excitement lies – in the front, on new products, new ways to serve customers, new tool for customers etc. So if I’m an existing or potential employee, I desperately want to move to this innovative part of the company – the part that has the buzz.

However, if I don’t bring the skill set to the table that makes me a part of the buzz, it will soon be clear that I (obviously) won’t be part of the excitement – this leads to one of two things – either I leave for a place where my skills are valued more, or I make peace with the fact that I’m a part of an organization that is not focused on my work. This is the beginning of a vicious circle that starts with mismatched expectations and leads to a growing apathy toward innovation or change. Effectively, these back-office parts of such innovative companies become the "left behind pieces” of the organization that are not innovative or change-embracing enough and therefore radically different from the rest of the organization.

It’s almost inexplicable but true that many of the most innovative companies in the world are least innovative when it comes to the way they think about the way they run their processes.

Lessons I learnt while teaching a class…

About two weeks back I taught a class to second year students at Wharton on ‘Driving Organizational Change’. Using Genpact’s example, we discussed how organizations drive change - what works and what doesn’t.

However, more than the subject of the class, what struck me about this session was how energizing it is to teach people who are eager to learn. Every time I talk to students, I’m amazed at how much it pushes me to think deeper and differently – and how it makes me more alert and agile. I fundamentally believe that when you enter into a dialogue with people who are keen to know more about what you’re saying, you think more about the answer and it gets better with experience. It’s a mutually beneficial exercise.

What was also interesting was the high level of interest that the students expressed in Genpact’s story. The class was a versatile group with some from Latin America, some from the US, a couple of them from Europe and some from North Asia. There was intense discussion on the “Corporation of the Future” – where more and more companies will only focus on doing things that differentiate them and prefer to buy services in other areas from external experts, rather than doing everything themselves. In that context, it was interesting to note that despite the diverse nature of the group, they all unanimously believed that the Corporation of the Future is the way the world is going to be. These are the future decision makers of the world and I was thrilled to learn that they thought the same way as I did!

The other interesting conversation was around process vs. technology. These are 25-30 year olds – not to be patronizing – but they have at most 4-5 years of work experience, and yet, they got it. The resonance was that it's always been about technology in the past but we know that technology alone doesn't always work. They were all very impressed with what process itself can do for organizations to do work better and felt that process in general is not accorded the importance it deserves.

This is the third time I taught in this program and each time the experience is terrific. I strongly feel one should grab every opportunity one gets to sound off ideas and provoke your audience to think differently because it has better outcomes each time.