Today there is a crying need for focus on the “top line,” which basically means finding new sources of revenue. This can only be achieved through innovation—by introducing products and services that offer new solutions for meeting people’s needs.
The challenge to innovate has been around for quite a while. Control Data, where I served as chairman and CEO, faced waves of technological change that were a result of the wellspring of scientific achievements of the first half of the 20th century. These huge changes not only brought challenges, but also opportunities to innovate. Control Data responded by successfully instilling innovation into the DNA of the entire company. The people there shared a powerful belief that innovation was central to their success.
Despite the self-evident need for creativity in organizations, it is truly amazing how few in management know how to produce the conditions that engender it. I have taken the valuable lessons I learned about corporate innovation during my tenure at Control Data and pared them down to seven overlapping principles. I believe that the creation of an innovative company demands a belief system that embraces these ideas, which I share here:
- Innovators are made, not born. Many remarkable individuals contributed to the technological innovations developed at Control Data, from the design and development of the most powerful computers of their time to the promulgation of innovative human resources policies and practices. Many of their unique abilities undoubtedly were genetically encoded. But it’s clear that Control Data’s culture not only made these individual contributions possible, but it also enhanced and nurtured them, allowing people to achieve more as a team than they could have as individuals. Understanding the characteristics that nurture innovation is helpful, but it leads naturally to answering the question of the strategic purpose of innovation, and thus, of strategy itself.
- Strategy is a journey of sequential steps toward an objective. Each step involves innovation in some combination of process, product and targeted market. This process is by its very nature dynamic because strategy must deal with changing technology, competition, changing economic condition and demographic and cultural change; it must also accommodate often capricious actions by governments both globally and locally. So the strategic thinking process is dynamic, a matter of trial and error, and thus evolutionary.
- Strategy must coevolve with technological change and the changing nature of the world it addresses. This in turn leads to the fourth principle.
- Technology is the strategic manager’s best friend. The individual business has little power to change the evolution of demographics and culture, nor is it capable of significant influence on economic change. Affecting government policy and actions is desirable but very difficult for a single company. But technology know-how resides in the minds and skills of employees, as well as in the world at large. Thus technology is the resource most readily available to the successful business strategist. Strategies for business growth all involve a basic decision trichotomy: do we make, buy or collaborate? Since the acquisition of desirable and necessary technology—know-how—can be expensive in terms of both time and money, we come to the fifth principle.
- Technological collaboration is a powerful strategic option. The other two branches of the strategic trichotomy, make and buy, present their own particular challenges. And the buy branch, acquisition, is more noted for failure than success. Control Data’s success at growing its know-how, new markets, new services as well as financial and other critical supporting capabilities by means of acquisition was unrivaled in its industry until the considerable success of Cisco a quarter of a century later.
- Crisis is inevitable. Crisis can result in chaos, but innovative leaders can use crises to galvanize people for positive change. One of the most common aphorisms of today’s business world is “The only constant is change.” Like many such sayings, although it is a clever juxtaposition of words, it masks the most compelling challenge of change: it is the unevenness, sporadic nature and unknown implications of change that really matter. Trying to cope with this uncertainty is the challenge of strategy—and for that matter, of life. Success lies in discerning the discontinuity in continuous change.
- Public-private collaborations present important but frequently overlooked strategic possibilities. Control Data was involved in collaborations at the local, state and national levels in the United States. These governmental partnerships took various forms, but the results were always the same: better opportunities for people who had been by-passed by the mainstream economy, better communities in which to live and profit to the company itself.
The principles and lessons to be learned from this extraordinary enterprise are not just once upon a time curiosities; they are keys to the future. In Control Data’s case the result was an exciting business that helped achieve success for its customers, from government scientific laboratories, space agencies and intelligence services to disadvantaged inner-city youth and rural farmers. There was also an extraordinary sense of success and fulfillment among our employees. In the words of one former executive, “Control Data was the best place in the world to work.” It is my hope that by sharing the seven principles of innovation I learned at Control Data, leaders of other businesses can help their employees feel the same way.