Monday, July 7, 2008

Innovation Mindset

A.G. Lafley has served as the CEO, President, and the Chairman of the Board of Procter & Gamble since June 2000. Previously, Lafley had been President of Global Beauty Care and North America for P&G. Lafley truly rose from within the ranks of P & G which he joined upon receiving his M.B.A. from Harvard Business School in 1977. With Ram Charan, A.G. Lafley has a new book out titled The Game Changer: How You Can Drive Revenue and Profit Growth with Innovation. A quick way to get the gist of Lafley and Charan's message is to listen to the A.G. Lafley interview at Harvard Business Ideacast.

Lafley attributes much of P & G's sustained growth and profitability to having developed a culture of innovation that is led by a leadership team that is truly engaged, chronically learning, and takes ultimate responsibility for the sustainability of the organization. These elements, he contends, are crucial to any organization in any industry that wishes to stay viable and competitive, or in my words, relevant. Lafley says, first and foremost, the leader has to be "in the game". His shorthand for this is "the CEO has to be the CIO (Chief Innovation Officer)". The leader has to bear the ultimate responsibility for realizing the vision. The leader has to manage the culture of his organization to realize the vision, thus he has to create a culture of innovation.

Lafley outlines the elements of a culture of innovation as being open to new ideas, open-minded as individuals, relational and connection-oriented such that they can take ideas and concepts and meld them to other ideas and concepts, making new breakthrough ideas and concepts. Members of an innovative culture must be able to work collaboratively and transparently for the benefit of the team's success, or the mission is doomed to fail. And, lastly, true innovators understand that the customer is always at the center of the what, why, and how of everything. An innovator seeks co-creative opportunities with his customer.

Lafley and Charan are re-defining our notion of innovation and its place in business. Their idea is that innovation is a mindset, an everyday habit. The old notion of innovation would be a technological product upgrade. Innovation for the 21st century encompasses the whole ball of wax -- the brand, the carefully designed business experience from the customer's perspective, the functional attributes of the product, the business model, the cost structure, the supply chain, the values of the culture and of the company. Innovation is the belief that status quo ways of yesteryear are not aligned with the needs of the customer or the business in the now.

What do we put at jeopardy when we are not innovative?
If we are not innovative, how do we become so?

These are big questions worth taking seriously, in my opinion, and Lafley and Charan are terrific thought leaders in this area.

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