Why Does it Take a Crisis?

|   Growing Your Business

Roger La Salle

Syndicate Chair, The CEO Institute

Profit of course is a most simple metric for business outcomes, indeed the very reason the business exists. There is also a simple metric for managing growth and increased staff numbers - Profit divided by Headcount (P/H).

A new hire initially costs money so expect a short term dip in the P/H result, but in the longer term this number should in fact be bigger than the pre hire number. If that’s not the case, then the new person is in fact costing you money.

This of course disregards any lifestyle choice you may make in sacrificing a higher P/H to enable yourself more leisure time. A laudable choice, of course.

In larger organisations we often see headcount grow for no good reason. In good times new people are hired with scant regard for the return on the investment they deliver. This is even more prevalent in Government where a simple profit metric may not be a relevant metric with outcomes said to be hard to quantify.

Even in smaller organisations people are sometimes added with no real metric to determine the value they deliver.

Notwithstanding the organisation, even in Government it should be possible to find some quantities measure for the value people deliver. Without that, organisations can grow like 'topsy' unabated.

To give an example, many years ago in the civil aviation sector there was always a push by the airport fire services for more budget, for more trucks and more staff. All of course justified by the simple words, 'saves lives'.  This of course on the tiny 'off chance' that there may be an aircraft crash. So pressing were these requests that the ultimate outcome would have been a fire permanently truck parked at the ready at every runway intersection. Of course this was a ridiculous notion put down only after some statistical calculations and a notional value put on a human life. A quantities metric was indeed created.

What about Innovation

Many companies have dedicated innovation departments and spend large amounts of money trying to embrace innovation. Lots of training is undertaken, special tee shirts handed out, coloured banners, slogans and special thinking spaces created, some even with coloured bean bags to sit on. The now fashionable co-working spaces with their multi coloured and funky fitouts have taken this to an entirely new level. This is all considered part of the innovation message.

But does it work?

Being mindful that innovation is not research and development, which is popularly deemed a pursuit where a defined outcome is not guaranteed, innovation people should be required to pay their way, otherwise we risk ending up with the airport fire services scenario.

When was the last time your innovation people delivered on your investment? Perhaps more to the point, do you have a metric for innovation? What would be the effect of dispensing with your innovation department if it’s not delivering real innovations?

The P/H metric alone may be sufficient as a starting point, but it is vital the all parts of an organisation be contributing to the outcome.

Perhaps the best way to achieve an innovation metric is to have the very people engaged in innovation working to create their own meaningful metric they agree to deliver on. Self developed KPIs approved by senior management leave little 'wiggle room' and if nothing else, this is a great way to open the conversations with staff.

Do we need a crisis to make it happen?

At the commencement of any workshop we conduct the first question we ask is 'Can you force people to be innovative?' The answer we get is always the same - NO!

We then ask, putting aside the innovations enabled by the IT and internet revolution, what period in history was the greatest for innovation? The answer we get again, is always the same, during the Second World War. In these times that saw the development of RADAR, SONAR, smart bombs, the tank, the huge development in aircraft and indeed the atomic bomb, a feat achieved in the USA less than four years from nothing more than a standing start founded on a mathematical equation. Truly was, 'Innovate or Perish'.

In the light of this we may ask why it should be any different with the innovation people in your business.

The present Coronavirus is a classic example of necessity inspiring invention. New initiatives for survival and growth are popping up at every turn.

Look at the growth in food deliveries, a service that is sure to stay. Look at the IT enabled home offices now sure to be a thing of the future. Bosses have realised they can gain more effective outcomes with people avoiding the drudgery of peak hour travel. Look too at the reduced office space and attendant overheads enabled by remote working. Shops are creating drive through services, an initiative we suggested many years ago for convenience.

Hair dressers too that have remained open are seizing the opportunity to win customers from those that have remained closed.

As for travel, we have seen air travel disappear with people managing with remote video meetings and travel costs for companies almost completely gone. Doubtless there are times when personal visits are important, but what we are seeing is that there are alternatives to what we considered normal; and many of these are here to stay.

What’s the message?

If your innovation initiative is awaiting a crisis to spring to life, it may be time to review your approach.

Yes indeed, we should demand a return on our innovation investment, and if you don't think this will work, feel free to make contact and we'll give simple and clear examples with quite remarkable outcomes.

Roger La Salle, trains people in innovation, marketing and the new emerging art of Opportunity Capture. "Matrix Thinking"™ is now used in organisations in more than 29 countries. He is sought after as a speaker on Innovation, Opportunity and Business Development, is the author of four books, and a Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies, both in Australia and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the 'Chair of Innovation' at 'The Queens University' in Belfast. For more visit https://www.innovationtraining.com.au.