By Sherif Attar
In a world of ever-changing ambiguity and uncertainty, executives have to face two challenges: excellent performance and people development. Where many managers think those endeavours are “competing”, this author believes they are “completing”. GET DOWN TO BUSINESS argues.
Do it yourself, or get it from others?
Positive change was once attributed to few creative individuals who pioneered ideas into action. But the 20th century essentially changed this to organised R&D and the rise of the firms as the unit of innovation. Think of names like – 3M, Ford, Hewlett-Packard. Here the role of creators is important, but the stage on which they act is defined by the firm. By the 21st century, the game moved on again and it’s now very clearly a team game. Making positive changes and increasing profitability involve dealing with an extended and rapidly advancing scientific approach. Different markets, political uncertainties, adjusting various discrepancies and competitors are increasingly coming from unexpected directions to add to the challenge.
A technology push or pull process saw increasing interaction across the firm with cross functional teams and other activities. We now need to operate with diverse network linkages accelerated and enabled by an intensive information and communication technology.
A key driver is the division of labour in firms improving their core competencies. For example, one of the most successful firms in the 20th century is in aircraft engines by moving away from manufacturing activities like grinding turbine blades into outsourcing areas of competence. The running shoe firm, Nike, which sees its competencies in design and marketing rather than in manufacturing and Dell which has built a business out of computers to individual needs by making extensive use of outsourcing.
Procter & Gamble spends a couple of billion dollars each year as R&D but they actually outsource much of their ideas. The future of R&D is C&D collaborative networks that are in touch with 99% of the research that we don’t do ourselves. P&G plans to keep leading innovation and this strategy is crucial for future growth. Similar strategy is adopted by firms like IBM, Cisco, Intel – they are all examples of open innovation where connections become as important as actual production and ownership of knowledge.
Outsourcing may not simply be one end of the traditional activity between doing everything in-house (vertical integration) and of outsourcing everything. This does not mean that the benefits flow without effort, unless the concerned in a network can solve the problems of co-ordination and management.
Participating in innovation networks can help firms get into new ideas and make them more creative. Creativity is more effective when the process involves making associations. Recent developments in the use of titanium components in Formula 1 engines have been significantly advanced by lessons learned about the moulding process from a company producing golf clubs. Much process innovation is about adapting what has been developed elsewhere and applying it.
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Sherif Attar, an independent management consultant/trainer and organisation development authority, delivers seminars in the US, Europe, Middle East and the Far East.
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