With an economic recovery whose progress is measured in inches not miles, executives across myriad industries are facing heightened challenges. In this Q&A, Stefan Thomke—Harvard Business School (HBS) professor and faculty chair of Managing Innovation—discusses how executives can take advantage of this period to boost productivity, leverage new opportunities, and position their companies for future success.
Why are many executives wary of innovation?
Innovation is all about uncertainty, and with uncertainty comes opportunity—but as executives, we don't like uncertainty. In fact, we do everything we can to drive it out. But if you drive out uncertainty, there's nothing to innovate. Think about it: If a company wants to grow, there are really only three ways. The first is to buy other companies. The second is to try to squeeze more out of your existing products. And the third is through new products, services, business models, and ways to reach customers.
What does your program, Managing Innovation, teach executives about managing uncertainty?
We've structured this course to help companies better align strategy with execution so they can better manage known and unknown risks. We begin with concrete, practical concepts and methodologies that underlie effective product development leadership. For example, participants create a development strategy and a well-balanced aggregate project plan. This leads directly to the selection of a portfolio of development projects that can be resourced effectively and that will match the company's business objectives.
Our participants learn ways to manage the threat of disruptive technologies and how to design a product development organization that leverages open and distributed innovation models. By using existing and new technologies, business leaders can revolutionize the organization through new experimentation strategies, simulation, prototyping, and technology development.
Is this really the time for companies to focus on new products and processes?
Companies may be tempted to stall new products, services, technologies, and even business models. Those that invest during uncertain times, however, can gain a significant competitive advantage over companies that don't. By believing that the economic outlook will get better and taking the necessary steps to bolster your business now, you'll be well positioned when economic conditions improve. Chances are many of your competitors will slow innovation, making it easier for your company to seize market opportunities. At the same time, customers are delaying their purchasing and slowing their spending. You will need to have the products, services, and processes in place to meet pent-up demand.
Aren't breakthroughs as likely to come from a fortuitous mistake in the lab as they are from a structured process?
I think "experimentation" is a more fruitful term than "mistake." Companies absolutely need to encourage experimentation, but they also need to limit the things that go wrong. Effective prototyping is critical. Experience, as in most things, makes a world of difference in product development.
So, can innovation be taught?
From a practical business perspective, there are two ways to look at product innovation: it must create novelty, and it must have value. Innovation must be produced at a cost that the buyer is willing to pay, and it must allow the producer to cover the cost and generate a sufficient profit.
Company leaders can learn certain skills that contribute to being innovative. Good leadership fosters the capacity for action, stimulates creativity, and motivates new ideas. More important, leadership is critical to moving from innovation to product development to execution. It draws from personal insights and capabilities, as well as actionable research. Companies can become great innovators provided they have properly equipped leadership.
How does HBs help companies develop business leaders?
Our specialized Executive Education programs deliver unparalleled thought leadership, education, and best practices—helping executives improve their company's performance both now and in the future.
To help improve organizational performance today—amid challenging economic times—we provide strategies and frameworks for improving productivity, reducing time to market, increasing operational efficiencies, and innovating for growth. At the same time, we help executives take the necessary steps to reposition their organizations for the economy's eventual uptick.
Our renowned case studies—taught the world over—provide real-world solutions that can be easily adapted to fit the participant's own business challenges. Every member of the HBS faculty, including me, is committed to exposing participants to multiple perspectives and new ways of thinking about business leadership. The result is executives who are well equipped to manage, lead, and yes, innovate, even in uncertain times.
Why should executives apply to Managing Innovation?
It delivers an immediate return on investment. For example, when we discuss product development, it's geared toward specific ways to restructure processes to make them more productive and more efficient today. By leveraging the tools their leaders learned in HBS Executive Education programs, we've seen companies reduce their time to market and increase productivity.