Everyday Innovation

By Ram Charan

Fortune magazine has called him “the most influential consultant alive” and he’s one of the world’s most sought after business advisers. Here, Ram Charan outlines why establishing a culture of innovation is essential to surviving the downturn.

The Eureka moment

“If you build it into the central nervous system of your business, you will see huge results.”
-Ram Charan, Business Advisor and Consultant

Everyday innovation is so important. If you look at processes through the lens of innovation, you look at the external landscape differently. And when you look at the landscape differently, you look at market opportunities differently. Consider the iPod: it changed the game for music, for consumer electronics, and has spawned a number of new industries.

Innovation can be a game changer. It will give you ideas and new ways to position. But it has to become a day-in, day-out part of your decision-making. If you build it into the central nervous system of your business, you will see huge results. It will enable you to search for new core competencies and competitive advantages. And this is how you sustain top line growth, this is how you get better pricing, and this is how you get better markets. It becomes a way of life.

Innovation is basically about connecting ideas. If you ask AG Lafley, if you ask Steve Jobs, they will tell you that it’s connecting ideas from diverse places in order to create new ideas. You start with what your company’s goals are, what you expect from people, and your strategies, and then look at how innovation can influence this. You look at what portion of the budget is going into projects that are actually creating or executing new ideas, something the consumer will prefer. You revisit your strategies and talent through constant reviews. And by doing this regularly in a rhythmic fashion, you will create a culture of innovation.

Make sure the consumer is the boss. Most of the decisions and innovations at P&G, if not all, are made on the basis that the consumer is the boss. Another key lesson is the need to review innovation projects. There have to be milestones. There has to be discipline. And that is a major lesson. A third is that people learn that if they don’t innovate, they cannot be promoted – which provides great motivation for people to embrace and nurture a culture of innovation.

The leadership part is mostly just learning how to be outside-oriented. Most leaders learn how to interact with the consumer, most learn how to design a team for innovation projects. Those are the kinds of things leaders really drive. How to work in cross-functional teams and live with the customers simultaneously to create new categories, new opportunities, new spaces, however – those are huge things going forward for senior leadership.

In any economic downturn, your competitors will get weak. However, that will change one day. It may take a year, it may take longer – it doesn’t matter. This is the time to focus on innovation, thereby positioning your company to take advantage when the upswing kicks in. You can change the game. But this is the time you’ve been waiting for, when the competition is not as strong. You have to make it count.

Ram Charan’s latest book The Game Changer – published by Crown Business and co-authored with Procter & Gamble CEO AG Lafley – is available now.