Innovation

The future is in creativity, not mere productivity

Published: July 10, 4:01 AM
Updated: July 10, 4:02 AM
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Organisations have nearly perfected the industrial model of managing work. For individuals, this model ensures that we know what we are supposed to do each day. For organisations, it guarantees predictability and efficiency.

The problem with this model is that work is becoming commoditised at an increasing rate, extending beyond manual tasks into knowledge work, as data entry, purchasing, billing, payroll and similar responsibilities become automated. Organisations are finding that it is increasingly difficult to draw value from the optimisation of repetitive work.

The value of products and services today is based more and more on creativity — the innovative ways that products take advantage of new materials, technologies and processes.

Value creation in the past was a function of economies of industrial scale: Mass production and the high efficiency of repeatable tasks. Value creation in the future will be based on economies of creativity: Mass customisation and the high value of bringing a new product or service to market, the ability to find a solution to a vexing customer problem, or the way a new product or service is sold and delivered.

We already have a word for creative output applied on a consistent basis to improve products and services: Innovation. But we need to take it out of the research and development lab and mainstream it — define it, measure it and optimise it. We need to understand how to manage creativity as well as we manage effort.

Productivity means we have wrung costs out of our operations. Creativity means we have created more value: We sold X units of something that did not exist before; we increased the sales of Y not because we made it cheaper, but because we made it better or we increased our value to customers by servicing needs we had not serviced before.

Think of how the iPhone redefined the mobile market, or how cable redefined how we consume entertainment. Taking costs out will always be important, but the equation is changing: Employees, management, strategy and operations will have to learn how to put value back in.

Organisational structure will have to change to meet the new reality of creativity as a core component of value and continuous innovation as the mechanism that sustains it.

The new organisation will include structures that support innovation around the clock and at increasing scale. These organisations will be more like organisms than machines. They will be structurally fluid — bringing individuals together in creative networks designed to adapt to an ever-changing landscape of customer needs and desires, often at a moment’s notice. Management will be the job of those who oversee creative economies, ecosystems and communities. Leaders will learn to manage innovation on a continuous basis; they will use scale to create differentiated products and services to solve problems and meet customer needs — all in real or near real time.

The value chain will supplant the supply chain. Supply chain management is about taking out costs and making processes more efficient. But today that is not enough. Value chain management is about how firms create value, how they coordinate the continuous innovations of creative contributors and how they make that process efficient for the consumer and contributor.

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