Insulate or Innovate: Richard Essigs, IBM Corporation

Today's marketplace challenges impact all consumer productsmanufacturers. The desire to protect the business is an appropriate response inthat it forces an organization to focus on key issues and make tough choices.It's normal to insulate during trying times. But faced with fundamental shiftsin shopper and consumer behavior, innovation is likely the key to rapidly adaptto the new world that is upon us. Is your organization so focused on protectingitself in the short term that innovation is likely to suffer in the long term?

 

The Road More Often Traveled

The argument for continuing to insulate during thesechallenging times often includes:  

• "In this economy, consumers aren't willing to pay for innovative products and services." Self-protecting organizations point to the fact that retail sales (excluding automotive) declined 7.2 percent during the first half of 2009 versus 2008. Yes, spending is down -- but related statistics with a focus on innovation show 60 percent of shoppers intend to spend less on dining out and entertainment, while a much smaller percentage plan to spend less on groceries, home care and health & beauty care. Will your organization be ready to offer innovative products and services as this shift in spending occurs?
• "If we're going to succeed with key retailers right now, we need to focus on cost reduction or we'll lose the ground which we've gained." While many retailers are seeking improved wholesale pricing and increased trade spending, improved analytical capabilities to drive deeper customer insights and differentiation through innovative products and services is one of the biggest gaps cited by retailers in their trading partner relationships. Will your organization be perceived as innovative as retailers evolve to address the fundamental shifts in shopper and consumer behavior?
• "We've gone through so much organizational change. There is no way we can focus on enhancing our capabilities in the area of innovation right now." The people within your organization who have remained are likely the best and brightest employees. Will your organization be perceived as innovative by those employees whom you'll need to identify, attract and retain when the marketplace recovers?

 

Innovation Roadblocks

What keeps an organization from taking action? There arethree main barriers to innovation in most businesses right now:

• Limited access to subject matter expertise and financial resources likely slows innovation. With budget and staff cuts, access to strategic resources can make a real difference for initiative teams. Why not offer an "Innovation Fund" outside the traditional budgeting process that provides access to subject matter expertise and financial resources to support specific product, service and business model innovations?  
• Marketing and Research & Development likely represent different cultures, organizational structures and reward systems in your company.  Why not assign a senior leader to instill a more integrated culture, organization, business process and reward system?
• In reacting to marketplace challenges, many organizations have become too focused on the changing workforce (staffing) versus the changing work (processes and required skills). Workforce changes might have come at the expense of the work associated with innovation (for example, developing insights from unstructured content, open innovation with external partners, increased collaboration in non-traditional office situations?) Ensure that the changing workforce aligns with changing work.

 

Innovation in the marketplace will continue whether youunleash your innovative capabilities or not. Isn't it time to stop insulatingand start innovating?