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Are there other necessary contributors like investors, marketers, or administrators? The more I think about it, the more I think innovation is a huge team effort. What we are really talking about isn't one or two or five designated "innovators" in a company, but a culture of innovation, a society of innovation. In case you are wondering, the US is second (or third, depending) behind South Korea in terms of innovation. As we all know from experience, not everyone in a company is an innovator, nor do they need to be. Someone still has to handle the mundane business of administration. Someone still has to make the existing product line profitable until the new one arrives. Even those of us who are by nature innovators and neophiles need people who can stabilize processes, keep the revenues flowing in, and contain the costs on existing processes. When we talk of innovation, what do we mean, really? Traditionally, innovation is seen as some new idea, new process, new product, or new service. That's OK as far as it goes. I would add another characteristic. A real innovation is actually good for us. I.e., it is a positive development in the world. Something that creates more pollution, lowers levels of health, or literacy is not what I would label as an innovation, regardless of its benefits to a certain narrow slice of humanity. By my definition, an innovation provides more value to the customer than the current product or service. Or, it may provide the same value as the current product or service, but at a lower cost. Alternatively, it may provide similar levels of value for similar costs but for a wider set of customers, or for reduced social costs. Aviation innovations In aviation, I would argue that an innovation improves reliability or safety, or reduces costs. Innovation can also show up as totally new products, totally new benefits, but those are increasingly rare. There are also incremental innovations, small steps forward. Look at the most recent set of new airplanes to hit the market. The G650 is a fine airplane, with a lot of excellent new technology on board, but it is still a transonic twin-engine turbofan, much the same as its competition; it differs in degree, not kind. Look at the Boeing 787, again, another really fine aircraft with a lot of amazing technology embedded in it, but it's just a more efficient 767. The 767 was a major innovation. It was the first long-range twin-engine transoceanic airliner. Our ETOPS rules were essentially built around the 767. Moreover, it was the 767 (along with its single-aisle sister the 757) that allowed airline markets to fragment into the long-thin routes that enabled us to fly from places like Vancouver, BC to Osaka, Japan. New product, new service, new benefits. The 767 was innovative. The 787? Not as much. We rarely see the major innovations in aviation anymore. I don't think this is because we have nothing left to discover or invent or that we have somehow managed to climb to the peak of air travel, but rather because our leaders have become risk averse. They fear failing greatly and so settle for failing in small incremental steps. This is the corporate way. No one gets rewarded for doing something majorly innovative at a large corporation. The system won't allow it. We get rewarded for incrementalism, for making a variation on a theme that top management understands, something that appears low-risk. I get the need for business stability—I've read Drucker, too—but this fear of flying shows a lack of vision, a failure of creativity, a fundamental denial of the need to move boldly, to establish new markets with new products. The world changes, and we leaders are charged with the responsibility to react, and sometimes to make those changes ourselves, to preserve and expand the firm. This is part of why we were hired. If we can't do this, or if we let our fears dominate every part of the decision making process, we should quit and let someone else have a shot at it. The importance of innovation Growth is generally through innovation. Yes, there are mergers, yes there are the expansions into other markets, but there have to be improvements in the products and services we offer or our competition will eat us for lunch. Actually, at the risk of seeming pedantic, an improved product or service offered by our competition can alter the expectations of our customers, making our existing product appear less valuable, drastically affecting demand for our product. For example. When jet-powered airliners were introduced, airlines that offered flights with their existing fleets of DC-6s and Lockheed Super Constellations—all very fine aircraft—found their service offering dropped drastically in value to customers. When regional jets like the Canadair entered service, the writing was on the wall for DeHavilland Dash 8 regional turboprops because the faster regional jets offered more value to the customer in terms of speed and perceptions. When the 747 entered service, the cost per seat mile dropped so low that airlines on the same routes were no longer as competitive. Yes, it was slightly faster than existing jet airliners, but the key was that it carried about four hundred passengers, more than twice as many as a 707 or DC-8, but with only slightly higher trip costs. Granted, this advantage only applied on a limited number of routes, but on those routes, it dominated. Aviation is defined by innovation, or was. Today, the industry appears to have peaked, or "matured." By "matured" we mean that there is no more growth through innovation. Maturity is the stage before decline, something worth keeping in mind. It really is grow or die, and growth is driven by innovation. Ergo, we must innovate or become irrelevant economically. Models of innovation Back to those new ideas for new products. Where do they come from? There are two fundamental camps, one is institutional-based, the other is consumer-based. One is a top-down push system, the other a bottoms-up pull system. Top-down push refers to a firm that uses its Research and Development (R&D) organization to think up new ideas, filter them through various executive committees, and pushed into the market place for customers to buy. Bottom-up pull is when the consumers mash up something from existing pieces to make something new and eventually some firm notices and makes that product, or a new firm is created by those involved. Malcolm Gladwell in his book, "The Tipping Point" talks about this. For a fictional take on the process, Cayce Pollard, the protagonist in William Gibson's novel, "Pattern Recognition" is a "cool hunter," someone who finds consumer mash ups for manufacturers. Bottom-up isn't for us We in aviation have little to do with bottom-up pull systems. We are almost entirely top-down push. Due to the regulatory environment in which we operate, our customers can't really do a mash up of different parts to create something new. They lose their certification if that happens. There are very interesting things going on at the fringes, with home-builts and suborbital spacecraft, but there isn't really anything anyone can do in the middle of our market without a great deal of engineering expertise and regulatory involvement. At least not with hardware. Top down push is what we have always seen, I think. Perhaps the closest we have ever gotten to bottom-up pull is with aerobatic aircraft, a relatively tiny market, and I'm not completely sure about that one. Crowd-sourcing Most of us have heard about "crowd-sourcing." It's the hot new wikinomics sensation that is the fundamental driving force behind the Free and Open Source Software (FOSS) movement. Think MIT, Richard Stallman, and the GNU Project. Think Apache web server, linux operating system, wikipedia, and even Local Motors. There are a great many frustrated software programmers maintaining COBOL or corporate web portals who would much prefer to work on something as deep and sexy as an operating system or web server. These are powerful, fundamental layers of technology to which coders are profoundly attracted; rewards include the recognition of people who are widely considered to be giants in the industry. Wikipedia is a much broader movement, with a slightly different reward system, socializing and peer-recognition by other subject matter experts. Local Motors (http://www.local-motors.com) taps into the unbelievably large number of trained automotive designers who will never have the opportunity to work in a major automotive R&D facility; their reward is to socialize with other designers, reap some peer-recognition, and ultimately to see their design as actual hardware. We have nothing like this in aviation. Top-down push, that's us When we talk about a top down push system, we are talking about firms creating the new product (or service) and trying it out on the customer. This requires quite a few things, like an organization designed and staffed to create new ideas, a top management that understands the need for innovation and a workforce that is flexible enough to shift smoothly to the new new thing. We need managers who can give people the time and encouragement necessary for them to come up with that great new idea. We have to create an environment of trust, sharing, participation, and mutual respect. As you can see, it is much more challenging to manage a top-down system than to wait for a bottom-up solution to show up on the radar. R&D That corporate pearl, the R&D department, is a mainstay in other industries, like agri-chemicals, computers, and even the textile industry. Aviation has some R&D, too, but it isn't quite the same thing. Sometimes an activity like designing a particular kind of airplane, say a supersonic transport (those are mainstays of aviation R&D, and likely will be till the next millennium), is classified as R&D work, unless we decide to build that particular airplane, in which case it becomes part of the usual program costs. Call it the difference between cost accounting and tax accounting. It takes time to build up an effective R&D group. The people there have to be very smart, it's true, but they also need to be grounded in the realities of the business, not just in the technology but also in the goals of the company, its targeted markets, expertise, and the critical issues that face not only the firm, but the industry as a whole. Their management need to understand the business at least as well as the engineers and scientists do, but they must also understand the top management in the firm and have credibility there. There has to be communication, trust, and credibility—and that takes time. More importantly, the R&D managers have to understand the people issues inherent in design People issues Designers as a group, and a successful R&D group will have a large proportion of designers, have what appears to most people as a lot of ego. Maybe. But those egos are also somewhat fragile. That is, it takes surprisingly little to damage the emotional investment the designer has in the project or in the firm. This damage will not have spectacular results. It will show up as poor results, lack of creativity, and eventually, a dearth of innovation. The R&D manager must understand this and be able to cope constructively. Not everyone can do this. From personal experience, let me just say that putting your son-in-law in charge of any R&D program is malfeasance in office. Working in a traditional organization stifles creativity; kills it. And there are people who are quite happy with that, not least of all, the managerial class in general. We as managers are working hard to keep everyone coloring within the lines as we have been charged to do and it is a rare manager who can effectively manage a creative employee. And yet this is where the rubber meets the road. This is where innovation begins. Let me tell a story on myself. I was working in the 777 Final Assembly Liaison Engineering group back in the late '90s. My manager was considered to be one of the better ones in our slice of the engineering pie. My forte turned out to be working complex multi-variable problems involving engineering, manufacturing, and suppliers. I could juggle all of those balls, work outside of the box, and come back with a workable, cost-effective solution with buy-in from all sides. I successfully worked problems that by our own required internal analysis ranged from $1.5 million to $20+ million. In my annual review my manager told me to work more of the routine minor problems and less of the big stuff. This annoyed me beyond belief. I had put a tremendous amount of energy and effort into clearing up those problems, any one of which would have paid my salary for the rest of my life with millions of dollars left over. I left that group. People who can handle the routine stuff are widely available; I wanted to make more of a contribution than that. Fast forward a dozen or more years, and I'm now the manager of the 787 Mid-Body Liaison Engineering group (I know, the apple didn't fall terribly far from the tree, did it?) and I now have an employee who is an excellent engineer, but he concentrates on problems that are costing the program millions of dollars, spending a lot of hours working with our production people, the "customers" in Seattle, learning what the problems are and how we can fix them. He saved us millions in six months. Millions; I am not exaggerating. But he wasn't helping the group move tags through the system, which was our primary organizational focus and what I got graded on. I felt like I was looking in a mirror. If you were wondering, I encouraged him to continue that kind of work. My job as a manager, as an officer of the company, is to understand something of the business. If my management had disapproved of my decision, I am sure I'd have heard about it, though I don't know if it would have affected my decision. The point is that there really are people who do not fit into round holes and still have something substantial to contribute. Moreover, the next time I have a big aircraft structural start-up and I need someone who can creatively deal with the thousands of difficult cross-organizational problems that I know we will come across, I know where to go. I know who can see the bigger picture; I know someone who can create a new solution outside of the usual channels. We need to nurture innovative people as a firm preservation strategy. Managing for innovation It's clear, I think, that we need smart people in organizations where they are supported properly to bring out the next new innovation. We don't usually get that, though. Moreover, there are a lot of firms where there are insufficient resources to create a separate R&D organization. Those organizations depend on their entire workforce to be innovative. Executives in that kind of firm would do well to manage their workforce for innovation, not simply productivity. I tell you now, organizational rigidity is death to innovation and most of the “managing for productivity” I have seen over the years is highly rigid and deadly to innovation. There have been improvements, however; things that make our jobs as managers somewhat easier. Technology like email and cell phones has made the cost of global support groups nearly zero. Our innovators need to be able to reach out to other parts of the company, creating ad hoc teams to solve interesting problems. Innovation is a cross-disciplinary activity. Rarely do we see new products or services come solely from one narrow organizational chimney. It almost always requires people from other disciplines, particularly when it involves products as complex and interdependent as those found in aviation. Our biggest problem In my experience, our biggest problem isn't finding smart people, or people who have an understanding of the company and the industry. While they don't grow on trees, they are a lot more common than the managers who know what to do with them. In short, the problem isn't our people; it's us and how we manage the company. We need to communicate with integrity, listen to our people, recognize their work, and give them the chance to implement their ideas while we support them. It isn't always easy, but it is leadership. And that's why we get paid the big bucks. Terry Drinkard is currently consulting on an aviation start-up. His interests and desire are being involved in cool developments around airplanes and in the aviation industry. Usually working as a contract heavy structures engineer, he has held positions with Boeing and Gulfstream Aerospace and has years of experience in the MRO world. Terry’s areas of specialty are aircraft design, development, manufacturing, maintenance, and modification; lean manufacturing; Six-sigma; worker-directed teams; project management; organization development and start-ups. Terry welcomes your comments, questions or feedback. You may contact him via terry.drinkard@blueskynews.aero Other recent articles by Terry Drinkard:
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