Leadership is all about collaborative innovationExcerpt from article published at Shine by Rajul Garg, Director, Sunstone Business School | Jun 23, 2014

It’s a new leadership challenge to leverage this great opportunity of innovation that lies ahead of every organization. Leaders who are embracing it are driving their companies forward.

The problem of innovation is a complex one. Most organizations around the world realize that it’s the key to growth and ultimately, survival, but often operations and firefighting take over, and innovation takes a back seat.

There are many ways people define innovation, but I find this one the most appropriate – “providing incremental value to your customers within the same cost”. I think this is the fundamental challenge – customers over a period of time look for more and more out of a product and a service.

Lets look at some examples of industries, which have done this well. Take wireless operators for example. In an economy with a high inflation, our mobile bills per minute of talk time have gone down over a decade and we have a whole lot of new features every year without any real incremental cost. Smart phones are another example. For a 5,000 rupee smart phone today, one gets a phenomenal package of a phone, entertainment, camera, music player, video player and so on. Each of these things individually used to cost more. Fast forward a few years, and the same 5,000 rupees will buy us that much more. On the other hands, look around you for products and services that keep increasing in price without offering incremental value – they have already faded away or will fade away over a period of time.

Collaboration and Co-creation is the key

The lines between employee and owner, customer and vendor are thinning. Collaboration is the best way to innovate. The biggest risk to innovation is that you spend on products and services that do not provide the same value to your customers as you thought. The best way to mitigate this risk is to co-create. Innovate along with your customers in smaller steps.

Enterprise product companies have done this really well historically. They are able to define a very specific set of customers and create products in that context, validating every feature along the way. This takes the risk away and the suppliers are sure they will put engineering money where there is demand and the customers are sure they get a product they want. The whole software industry has rapidly adopted an agile engineering approach where you release every month and validate, vs. the past practice of releasing every 6 months or even 12 months.

In the B2C world, we see analytics take over for the same reason. Product management now works tightly with analytics team. If an Internet company wants to determine whether to put yellow or green, they would put both (something called A/B testing) and analyze which is getting better results. Categories on online commerce companies evolve rapidly with results and sales.

Influencing more important than authority

For innovation to flow through, people across the organization have to be empowered to take decisions and to innovate. This is difficult to do since this challenges the traditional norm of a process driven organization. Even more onerous is that it challenges the traditional authority. Chances are that the front line foot soldier interacting with the customers has far more influence on the customer than the back-office manager. Organizations have to re-organise decision making based on influence and devise processes and policies to enable this.

The key to influence is the power to help. You can influence people who believe you can help them. They trust your view and go along with your vision.

Global improvement = global influence = sustainability

These days there is a lot of talk of sustainable enterprises. The underlying theory is that these organizations should make the world a better place. While there is a social argument to this, there is also a strong economic argument. An organization, which is contributing positively to the world, has the power to draw the world in its mission. It can leverage global resources, investments and interest far beyond its economic impact. Every one wants them to succeed. Hence, choosing a mission that drives the organization in this direction can be very powerful.

It’s a new leadership challenge to leverage this great opportunity of innovation that lies ahead of every organization. Leaders who are embracing it are driving their companies forward.