PwC regularly invites key international experts to share their experience and wisdom with our private clients. Professor Paddy Miller spoke to clients around Australia, revealing what he has discovered about the thorny topic of ‘innovation’ through research with private businesses across the globe.
Dr Miller is a Professor at the IESE Business School in Barcelona, Spain, and a visiting faculty member at the Chinese European International Business School in Shanghai and Macquarie Business School in Sydney.
His latest book, Innovation as Usual, details the research he's undertaken into how and why companies succeed - or fail - at embedding innovation into their DNA.
Companies big and small are falling over themselves to be 'innovative' - but what does innovation actually mean? And how can businesses develop a culture of innovation that helps them grow, adapt, and lead the market?
The first thing companies need to address is the "disconnect between management and staff, and between the company, clients and suppliers" when it comes to taking an idea and following it through to an innovation that you can go to market with.
Dr Miller has met with and interviewed hundreds of managers and CEOs in an attempt to drill down into their business models. By following companies like Kodak, Samsung and Merck over time, in some cases for a decade or more, he's been able to put together a compelling picture of where they've gone right - and wrong - along the way.
He maintains there are two key choices when it comes to innovation: incremental improvements (for example, the evolution of the trolley suitcase over several decades), or one big disruptive idea (the Dyson vacuum cleaner). In deciding which way to go, one of the decisions that companies need to make, he says, is whether to go for the 'quick' win or the 'big' win.
"Dyson went for the 'big' win, the disruptive vacuum cleaner - but it took 15 years and 5000 prototypes. Smaller companies might decide to focus on a niche within the market - the opportunity space - instead of trying to take on the big guys directly."
According to Dr Miller, "the research is clear".
"When we started to look at big vs small firms, public vs private, it soon became clear that when you have an owner-entrepreneur involved in business as CEO, the tendency is to quickly bridge the gap between the big ideas and the execution of those ideas. That's because those companies are still close to their customers, their staff and their suppliers.
"As soon as the company starts to grow, the disconnect kicks in."
So how do you avoid that disconnect? One way is to support the people within your organisation who he refers to as 'Innovation Architects'.
These are the people who can turn an innovative 'idea' into the 'next big thing' that has the potential to transform your business, your market - or even your whole industry.
"An Innovation Architect can come from anywhere in the organisation," Dr Miller says. "They are the person who creates the space for others to be innovative. They might be a department head, a divisional head, or they might be the person who's got a small production team.
"What they have in common is that they understand how the organisation works, how to get traction for an idea, how to put a team together, and how to give that team political cover for as long as they need it. So that, for a while, an idea is able to exist without much interference."
Dr Miller calls this approach 'stealth storming', and says this breathing space is vital for an idea to be developed, tested, tweaked and readied for buy-in higher up the company food chain.
He cites Steve Jobs' experience at Atari as the classic example.
"Nolan Bushnell and Al Alcorn, who ran Atari - these are the guys who let Steve Jobs be Steve Jobs.
"For business owners, it's not about being Steve Jobs, or even necessarily finding the next Jobs yourself - it's about searching for the Innovation Architect, the person who will create the space for people like Steve Jobs to shine.
"Then encourage them to look within your organisation and find people with a track record, the ability to follow through. But be prepared - often they'll be the hooligans!"