What if the 1968 “Peter Principle” was right? Does it matter in this century?
Laurence J. Peter’s “Principle” in essence said that in a company, people will get promoted until they reach a level for which they lack some competence. Yet here we are in a fast-paced business environment that demands constant change—especially innovations related to digital tools—in order to attract customers.
When change is constant, as it is in this century, everyone needs to learn new competencies
- Corporate leaders need to understand how to develop innovative processes and then how to sustain them.
- They need to apply disruptive thinking to reframe how and why products are produced.
- They need to view their IT team as partners in driving innovation rather than a second-tier team that supports others in their daily work.
- They need to lead in such a way as to empower employees to view innovation as the new norm.
- And, consistent with stories we have shared previously, leaders and employees need to check in with customers about how to make a new product that customers will find useful.
Moving beyond mantras, learning to innovate
You may have heard by now that Microsoft’s new CEO is Satya Nadella. A little over a week after the announcement of his promotion, a New York Times blog suggested that innovation appeared to be the new mantra at the software development company. We hope Nadella has latched onto this Harvard Business Review (HBR) article that has been offered online by BRW, an Australian business magazine, on recognizing five new patterns of innovation.
Asking the right question has been a hallmark of sparking innovation. The authors of the HBR article offer an approach to systematically infusing innovation into a company by looking at “opportunities generated by the explosion in digital information and tools.” They suggest asking: “How can we create value for customers using data and analytic tools we own or could have access to?”
The article points to leaps in the IT world that now enable businesses to apply IT tools to add brand new types of value to their business in five “overlapping” approaches. They are:
- Augmenting products to generate data. In the cited example, Rolls Royce learns to use digital analytics for early detection of airplane engine problems, leading to improved engine designs and a revamped business plan
- Digitizing assets. iTunes is a good example of how content has been changed and is now consumed in a new way. Also, remember the 2013 Emmy Awards in which a winning show was never screened via TV? Netflix’s innovation has been signed for a third season, still without any TV screening.
- Combining data within and across industries. Netflix again scores with its big data applications, according the Wall Street Journal.
- Trading data. The article cites the venture between TomTom, a provider of satellite navigation devices and services, and Vodafone, whose network gathers data on subscribers who are driving, where they are and how fast they’re moving—data TomTom uses to pinpoint traffic jams.
- Codifying a distinctive service capability. Leveraging an existing capability in a new way can lead to innovation and more value to customers. A federal government website, challenge.gov, has a host of innovations as part of challenge and prize competitions, run by more than 50 agencies across federal government. Many are based on this idea.
These five patterns of innovation offer a systematic path to the world of product development, management, and innovation for an established company whose leadership has decided to disrupt their company’s old patterns and forge ahead in new ways.
Focusing on one or two of these approaches, which emphasize how digital tools can drive product innovations and not just take a back seat to them, are the keys.