October 2008

Today, it is innovate or wither

By Gregory Hale, InTech, Editor

Jan Baan is an entrepreneur through and through.

From his days starting up The Baan Co., maker of the Baan ERP software, through stints as a venture capitalist, to his most recent enterprise as executive chairman and chief executive of business process management software provider Cordys, Baan seems a tireless fountain of ideas.

He is an innovator, and he encourages folks at his company to truly keep ideas flowing and not get caught up in conventional thinking.

"I have found the maximum innovation time for a company is 20 years," said Baan during the MESA 2008 Plant-to-Enterprise Conference in Orlando, Fla. "After that, innovation is called M&A, mergers and acquisition."

People that work with Baan are lucky. They work in an environment on a daily basis that encourages innovative, unconventional thought. Look around the industry and see if there are more companies like Baan's that foster innovation or others that just continue to keep the status quo.

The problem is, no matter how hard they fight it, companies need to innovate. No, they do not have to create something that will change the world, but they do have to add incremental change to spark the company's product line. They need to add a nuance or twist to give them an advantage that will advance the company over the competition. That is not a one time only occurrence, either. It needs to happen on a regular basis.

One of the ideas behind innovation is having a vision of where you are going before you even start.

"How do you innovate when past performance does not guarantee future success?" asked Peter Skarzynski, managing director at industry consultant Strategos at the MESA conference. "The future doesn't just happen, it is created."

There is a 96% failure rate on innovated products, but that does not mean a company should give up, he added.

"It is hard. It is difficult. In many organizations innovation is often suppressed," he said. He then went on say, "dare to be radical. Radical does not have to be risky."

The catch is when trying to create something, big or small, you will need complete buy-in, and that is difficult for leaders that think in terms of how we can grow in the next quarter. Even Baan said that was his biggest mistake when he took his software company public years ago. Yes, his net worth increased, but the company went from being product-driven to customer-driven to shareholder-driven. That kind of thinking can cripple a company.

A company's leader needs to have a strong backbone to stand up to the shareholders and say, "We are going to create and be an innovative company." The leaders must then rely upon others on the team to help get them to the promised land. No one person has the answer, but the collective can be an incredibly strong force.

"It is no longer about productivity and agility," said Matt Bauer, chairman of MESA. "(Manufacturers) must innovate. Innovation is all about bringing together new ideas, new concepts, and capabilities in unique ways. It's about manipulating the established to create something new."

Leaders need to have the vision and the confidence to encourage other creative thinkers within the company. Just because the boss has the lofty title, it does not mean he or she has all the ideas. Creativity does not know anything about corporate structures or politics. It just needs an outlet.

Just ask Baan.

Talk to me: ghale@isa.org or (919) 990-9275.