"Innovation is seeing what everybody has seen and thinking what nobody has thought," said Albert Szent-Györgyi.
How does a company reach escape velocity, breaking free from the gravity like force of organisational inertia? How do we define innovation? Is there a difference between a bright idea and innovation?
What is the path to being innovative? One would be hard pressed to find an organisation that says they are innovative, but are they really?
Innovation isn't just a destination; it's a journey. It's about challenging conventions, pushing boundaries, and refusing to accept the status quo.
Clayton Christensen defined three types of innovation:
Efficiency - is a measure of output over input, it generally has to do with cost, producing a product for significantly less, or even for [close to] free like the communication tool WhatsApp, shaking up the market. Or, it may be providing five star quality, at a one star cost.
Sustaining - are all those little incremental improvements, organisations make just to stay in the game, trying to remain competitive and profitable.
Disruptive - are the game changers, that shake up an industry, or how we do things day to day. Examples would be, for instance, the wheel, electric light, penicillin, internet, smart phones, AI -- and things we can’t even imagine. How you think things will happen, probably won’t.
Now, imagine a world where every idea, no matter how audacious, finds its wings. A place where innovation isn't just a buzzword, but a force to reckon with. An unstoppable tide of creativity that surges through organisations, shaping its future.
Reduce costs and increase quality
Generally, price undercutting can be a quick slide to the bottom. There is almost always a competitor who can offer a product at less cost. But, if one can reduce the cost, and increase the quality, that gets noticed.
Ever controversial Elon Musk may not be the most liked entrepreneur at the moment, but both SpaceX and other companies he leads have been masters at significant cost reduction, while at the same time maintaining, or increasing the level of quality.
His innovative thinking based on going back to first principles, and simply not working by analogy, just copying what others have done - is a lesson learned.
“Decades of cost-plus contracts had made aerospace flabby. A valve in a rocket would cost thirty times more than a similar valve in a car, so Musk constantly pressed his team to source components from non-aerospace companies. The latches used by NASA in the space station cost $1,500 each. A SpaceX engineer was able to modify a latch used in a bathroom stall and create a locking mechanism that cost $30,” writes Walter Isaacson in Musk’s 2023 biography.
Idiot index
“He was able to get the mothballed factory, which at one point had been worth $1 billion, for $ 42 million. In addition, Toyota agreed to invest $50 million in Tesla. When redesigning the factory, Musk put the cubicles for the engineers right on the edge of the assembly lines, so they would see the flashing lights and hear the complaints whenever one of their design elements caused a slowdown. Musk often corralled the engineers to walk up and down the lines with him,” highlights Musk’s hands on approach and frugal cost consciousness.
SpaceX often had to deal with the US Air Force’s rule-bound bureaucracy that chaffed against Musk’s approach of questioning fundamental assumptions, as Isaacson explains. “This did not sit well with Musk, who was instilling a culture based on questioning every rule and assuming that every requirement was dumb until proven otherwise.”
“Ever since he flew back from Russia [where an attempt was made to over charge for old used rockets] he calculated the costs of building his own rockets, Musk had deployed what he called the ‘idiot index’. That was the ratio of the total cost of a component to the cost of its raw materials. Something with a high idiot index – say, a component that cost $1,000 when the aluminum that composed it cost only $100 – was likely to have a design that was too complex or a manufacturing process that was too inefficient. As Musk put it, If the ratio is high, you’re an idiot.”
There is a big difference between an idea, an innovation. It is called cash.
David J. Abbott is a director at aCatalyst Consulting. [email protected]
