The Decline of Innovation and the “New Normal”

There’s lots of talk of a “new normal” rate of unemployment. In other words, we just need to get used to 9% or so of us not having a job. Economic growth of 2% will become the norm. Hian Teck Hoon (Singapore Management University) and Edmund Phelps (Columbia University) believe that the unemployment rate will stabilize at about 7% for the foreseeable future [1].   They argue that one of the primary reasons for this is the lack of innovation in business and industry. There was a time when concerns about Japanese efficiency were overshadowed by the Americans’ ability to innovate. No matter how diligent, hard working, and dedicated the Japanese workforce, nothing could overtake the relentless innovation coming from the U.S. Well, not so much any more! Hian and Phelps continue by suggesting that the U.S. labor force will shrink with the exodus of retiring baby boomers, and that technology innovation will continue to decline leading to a lowering of productivity growth. So, how do you combat this? What needs to happen to stimulate more innovation? Spend more money? Start new programs? What? No one, of course, really knows the complete answer to this. What we can do is look at our own organizations and assess whether they are encouraging innovation or not.

There are many things that are impacting our county’s economy that no one of us controls; the price of oil, earthquakes in Japan, war in Libya, etc. What we do control is our own actions, our own behavior. As an organizational leader, what actions can we take that will help move us in the direction we need to be going? One thing that we can work on is creating a workplace that encourages innovation and creativity. Even without a big budget, there are lots of things that can advance creative thinking. Most importantly, the organizational culture must be fertile. Leaders must be ready to listen and accept unusual ideas, even those that challenge their “sacred cows.” This is one thing that can be emphasized during leadership training. The best leadership training workshops spend a substantial amount of time and energy on listening and its importance to the leader’s team and organization. Again, listening is a skill that does not require a lot of money to implement.

Many large (and some small) companies have a suffocating, claustrophobic, bureaucratic organizational culture. While most pay lip service to creativity and innovation, the reality is very different. During a team building exercise at a large electronics company, I encountered a very unhappy employee during the assessment phase. Early in the interview, it became clear that he was extremely angry with the company. He was a talented, well-educated, articulate engineer who had been with the company for a long time. As we talked, he told me of an earlier experience that sparked his discontent. He had submitted in idea for a new product. The idea was reviewed, accepted and he was given an award for his idea. The award was not trivial, over $25,000. Still puzzled about his resentment, I pursued the thought further. What I discovered was that even though he had received a financial reward for his idea, the company never implemented the proposal. It sat on a shelf for over 15 years. It is still there. With this engineer, it was not about the money. He was excited about the idea and eager to do the work to create something worthwhile. But, he was not allowed to do so. You can guess how many more innovative, creative ideas he offered after that. Who knows why his managers decided not to proceed. Too expensive! Not enough resources! Too many other priorities! Too far outside our corporate image! No one knows who was right. What we do know is that they lost the creative potential of an extremely bright, creative employee.

Many of the things that leaders can do to encourage innovation and creativity are the same things that encourage employee engagement of all kinds. Here are a few of the most important ones:

•    Make innovation a priority. Talk about it. Show appreciation for new ideas. Not necessarily with money but with visible support.
•    Spotlight unusual initiatives and oblique thinking. Just because you’ve never seen it done that way, doesn’t mean it won’t work. Write it up in the company newsletter. Mention it in the quarterly report. Name names. Let people know that it is O.K. to talk about unusual ideas, even those that are challenging, not mainstream.
listen innovative leadership training•    Listen. Try to hear people out before analyzing, criticizing, second-guessing, or minimizing their ideas. Don’t make a joke out of crazy-sounding proposals. Even if a particular idea is totally impractical, sometimes you can learn something by talking about it. The idea may be modified or the need may be satisfied in some other way.
•    Have a system. Create a system for incubating, organizing, and responding to team member ideas. Don’t be overly regimented but you should have a way of keeping track of ideas and noting whether they have been implemented and if they are producing results.
•    Follow through. Don’t open the door, and then back down. If you ask for ideas, be prepared to implement as many as possible. Put your money where your mouth is. Even if you run down a few blind alleys, it is often useful to demonstrate that you are willing to take a risk.
•    Make creativity everyone’s job. Don’t invent a “creative department” or a “director of creativity” or “creativity czar.” Once you have a DI (Designated Innovator), that let’s everyone else off the hook.
•    Allow for mistakes. Not every new idea is going to work out. Learn from the mistake. Don’t punish the inventor.
•    Build teams. Especially when it comes to implementation. Sometimes teams can be very creative but they are especially effective when it comes to executing new processes. Don’t, however, discourage individual creativity either.
•    Encourage diversity. People with different backgrounds, ethnicity, languages, history, experience, and so on can often see situations in very new, fresh ways.
•    Embrace new hires and outsiders. Never say, “That’s just not the way we do it.” Or, “That’s not our culture.” Or, “We’ve always done it this way.” Don’t let the old-timers intimidate the less experienced. Someone from a different company may see how to do something in an entirely different way. Don’t be afraid to explore.

In short, the things that make good leaders good are the same things that will encourage innovation and creativity. You may not fix the entire country’s economy by developing a more creative workplace at your own company, but it is a move in the right direction. And, it is an action that does not require trillions of stimulus dollars. If you are one of the leaders of your organization and you open your company’s wallet and see nothing but leather, don’t give up hope. Innovation comes from very little investment. Don’t try to do it all by yourself. Let the team, the whole team, help. Most of the time, they are glad to pitch in. The “new normal” doesn’t have to be grim. Your company’s leadership training can fight the tendency toward pessimism by helping leaders understand that the “new normal” can be what ever we choose it to be. More productive, creative, innovative, engaging workplaces do not depend on having lots of money. Being part of something that works is highly satisfying for people. Having an opportunity to innovate and create goes a long way to motivate most people. So, maybe the closing comments in leadership training might go something like this, “We are enthusiastic about going to work each day because I can’t wait to see what’s new and exciting. I love being a part of this.”

[1] Hoon, Hian Teck and Phelps, Edmund. INNOVATION AND EMPLOYMENT Working Paper No. 69, Center On Capitalism And Society: Columbia University http://www.capitalism.columbia.edu/ April 2011.

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