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Perils Of Product Innovation

The pursuit of innovation potentially mandates that a company's organisational structure be elastic enough, allowing room for newness and innovation in both thinking and policies.

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The consistency with which Apple introduces new products every year; each a huge success, is truly inspiring. Like Apple, there are so many sensational success stories of great products that have been launched in the last two to three decades, primarily due to the internet boom. So much of the genius of innovation that was once the realm of exceptional individuals such as Thomas Edison, Alexander Graham Bell, and Marie Curie have now become the domain of large companies. The latest example is the quickest development of vaccines by companies such as Pfizer, who set out on a mission to develop a vaccine in six months; unthinkable, given that the previous best was four years to develop a vaccine for mumps.

Admittedly, successful product creation is an outcome of an arduous journey, fraught with the risk of failure. Nevertheless, the doggedness of purpose and belief in the product's potential drives companies and entrepreneurs to create valuable products. The pursuit of innovation potentially mandates that a company's organisational structure be elastic enough, allowing room for newness and innovation in both thinking and policies. It is a pity that organisations compromise on the flexibility to innovate, bowing to internal pressure to serve the interest of individuals rather than itself.

How companies organise themselves to innovate is an interesting study. When Steve Jobs returned to Apple in 1997, one of the first tasks that he famously performed was to sack all the managers in a single day. From a conventional structure with multiple individual P&L books (profit & loss), Mr Jobs restructured the organisation to be functionally driven. Under this approach, the company was sought to be led by experts with the requisite expertise, notably with a single P&L. The thinking that precipitated this change was that the best products could not be created in the shadow of cost and price targets. With individual P&L books, product managers tend to be trapped within a narrow prism of profitability rather than product innovation as their primary goal. With a functional structure, managing P&L, and at the same time retaining focus on product innovation is eliminated.

This theory was reinforced nearly two decades later, in 2016, when iPhone 7+ was launched with a dual-lens camera with a portrait mode. This feature became a huge success and is now a gold standard in smartphones. This innovation would not have been possible with a traditional approach as the commercial risks would have potentially outweighed the cost-benefit. Unsurprisingly, to this day, Apple continues its functionally led structure with only the CEO, Tim Cook being the only position in the organisation chart to whom all functional heads report.

However, successful product innovation does not come easy to anyone, and repeated failures are relatively commonplace. Many give up, but some persist and become huge successes. Jeff Bezos, the founder of Amazon, while giving a speech in November 2019, candidly admitted that his life is based on a series of mistakes. He further added that every interesting, important, or beneficial thing he has ever done was through a cascade of experiments, mistakes, and failures. For records, Mr Bezos is credited with inventions of products like Kindle and inventing a system of invention! It is no wonder that innovative entrepreneurs such as Mr Bezos or even Mr Elon Musk, who are also CEOs, spend fifty per cent of their time or more on these discovery activities than do CEOs with no track record for innovation.

Despite an institutionalised approach to innovation that flourishes, the individual brilliance that ends up in most admired products is equally fascinating. Take the case of Spencer Silver, the American chemist at 3M who created a unique adhesive that brought the Post-it note into being. His apparent failure to make a strong adhesive for aircraft production ended up co-creating one of the most ubiquitous office products ever conceived. A glowing example of persistence translates into luck. This achievement is amongst several accidental inventions and discoveries that the world has benefited from, such as penicillin, a safety pin, and the micro-wave oven.

To incubate a successful product, a persistent focus on profit is a deterrent. Albert Bourla, CEO of Pfizer, attributes the success of the vaccine development in record time to a moon-shot challenge, out-of-the-box thinking, inter-company cooperation, and liberation from bureaucracy. Notably, isolating the scientists from the burden of delivering profit was key to the success.

Structurally, organisations need to create a thriving ecosystem of co-creation.

In our universe, it is the female species that is blessed to procreate, and it is for this reason, God must be a woman, the ultimate creator!

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Milind Kothari .

The author is Managing Partner, BDO in India

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