Jack Welch, former CEO of General Electric, once proclaimed, “Variation is evil.” Through management practices like Six Sigma, Welch and many others sought to eradicate risk entirely from the operations of their companies and achieve extreme efficiency, predictability, and reduction of error.
Companies typically treat their innovation projects as a portfolio: a mix of projects that, collectively, aim to meet their various strategic objectives. Some projects, for instance, will improve business processes, others develop new products and services.
The era of international travel began in the mid-19th century, with the golden age of transatlantic ocean-going. The British company Cunard, a leader in the industry, transported millions of immigrants from Europe to the United States around the turn of the 20th century. By the end of World War II it had emerged as the largest Atlantic passenger line, operating 12 ships to the United States and Canada as it captured the flourishing North Atlantic travel market in the first postwar decade.
Sooner or later, every company runs into challenges that force them to make tough trade-offs during the innovation process. Harvard Business School associate professor Rory McDonald calls these moments “tensions.”
Now more than ever, companies are under immense pressure to innovate and make their products, operations, and business models more compelling and competitive.
In times of uncertainty, many companies are just looking for ways to survive — and can easily forget that doing so often requires thinking ahead, not just watching their backs. For lots of businesses, it’s now more important than ever to double down on innovation to create new products, develop better business models, or defend from scrappy competitors.
Is American innovation sputtering? The data suggests so: Productivity growth in the United States, which is powered by innovation, has been decelerating. Total factor productivity grew substantially in the middle of the 20th century, but started slowing in 1970. This slow growth continues today, with productivity lower than it was more than 100 years ago.
It turns out that the word “innovation” is not a Harry Potter-esque magical incantation that, once spoken, renders companies more inventive, creative, and entrepreneurial. The word can be uttered by a CEO speaking to employees or Wall Street analysts. It can be emblazoned on the door to a new innovation center in Silicon Valley. It can be inserted into people’s job titles. (Yes, even Toys R Us had a head of innovation.)
Resist the urge to react too hastily to major change — or to use it as an excuse not to take action. Focus instead on making the fundamental strategic choices necessary to strengthen your business.
