Customer value creation = innovation

We also noted that for an organisation to be sustainable, the primary focus should be on creating value for customers, with the value creation for employees and investors being subordinated to the customer-centric goal. The intrinsic systemic link between the three domains of value creation, customer, employees and investors is such that value creation for one of the stakeholders at the expense of others is not sustainable.

In our discussion, we noted that an organisation should ideally commence its cycle of value creation analysis at the customer value creation point; focusing on trying to understand what it is that will be a competitive advantage in its offering to the customer as opposed to competitors. Creating a competitive advantage, as we noted, entails pushing up innovation capacity, both product and process innovation.

In this instalment, we will discuss a number of typical organisational systemic issues that stifle innovation. The monsters against innovation, among others, include traditional management practices, company rules and the reward and punishment regimes.

 

The management practice of ranks and hierarchy is one of the impediments to innovation. It is accepted practice that the people who are promoted to high-ranking positions in organisations are selected on the basis  of qualifications and experience. However, the level of experience and qualifications does not always have a direct correlation with an individual’s creativity and innovation capacity.

 

Experience without education has been known to produce innovation, hence the need for recognition of prior learning as an acceptable measure of capability in place of formal education. The unsung hero, Hamilton Naki, was a black South African laboratory assistant who worked with Professor Chris Barnard to perform the first human heart transplant at Groote Schuur Hospital in Cape Town on  December 3 1967, under the auspices of the University of Cape Town.

 

This was during the pinnacle of Apartheid in South Africa, and there was no reason for the then government to believe that an uneducated black assistant was anything more than a labourer. Yet Naki played a major role in training more than 3 000 junior doctors under Professor Barnard. Was it under Barnard indeed or was the training offered equally by both men? In an interview shortly before his death in 2001, Barnard said Naki was “one of the greatest researchers of all time in the field of heart transplants.” He added that Naki “was a better craftsman than me (Barnard), especially when it came to stitching.”

What sort of corporate Apartheid is there in organisations today? From my perspective, it is the systemic separation of human beings into classes due to the levels of education and experience. The upper classes become the managers who attempt to run the company with varied success levels. The lower classes make tea and clean for the upper classes.

 

There is seemingly little time when these different classes of people are valued equally, or fairly fully assessed for their creativity and innovation capacity. One may want to argue that there are psychological assessments that are carried out when people are hired. Would you assume that Naki would have passed psychological assessments better than the junior doctors that he trained? The young school leavers with straight “A’s” on their certificates would probably have passed better than him.

Business strategies incorporate the ideas influenced by the education and experience of top managers; that may seem fair game because the lower classes may not have the capabilities to write business plans in the official business language.

 

However, it is important to note that innovation and creativity are not necessarily triggered by a good MBA from an excellent business school, otherwise we could all be stuck in the stone age up to today because those early beings did not have degrees. Why then are the lower- ranking employees in organisations excluded from voicing their thoughts on how the business could be run better?

 

Naki’s original role at the University of Cape Town was to cut the lawn. In 1954, Robert Goetz, the university’s professor of surgery, asked Naki to lend a hand in the laboratory to hold down a giraffe he was operating on. The Professor was impressed with Naki’s skills and transferred him to the lab. Goetz left Naki with Barnard when he left the University of Cape Town.

 

Barnard first used Naki as his anaesthetist and later as his principal surgical assistant. Barnard defied the organisational rules of hiring experienced and educated people, making a surgeon out of an uneducated villager. Barnard also defied the Apartheid laws by elevating a black man to such a high level.

I am not advocating for the willy-nilly promotion of lower level people into higher ranks, rather I am putting forward the point that their innovative ideas should see the light of the day.

 

An organisation that does not give all its employees a voice, treating the lower classes as village idiots, may stand to lose out on the opportunities to tap in on their innovative ideas. There are many CEOs whose rise to their roles were supported by a personal assistant who was there long before them.

 

The personal assistants’ extended experience within the office, having supported many CEO role incumbents in the past, puts them into the “unofficial mentor” role for the new boss. Most such mentored CEO’s are known to fight for and protect their personal assistants because they recognise their value.

Some organisations open up the innovation discussions to all employees. This usually happens when the competitors are steaming ahead with better products and the organisation is beginning to feel the pinch on the bottom line. This crisis management mode is characterised by scenes of the management team meticulously studying all ideas to find ways of catching up with the competition and just get slightly ahead.

 

Note that the motive is to close the gap triggered by the crisis of losing their market share. Once the financial state of affairs starts to improve, the steam on the innovation initiative is relaxed, leaders heave a big sigh of relief and award themselves bonuses. Innovation is not just about catching up in times of crisis; rather it is about getting ahead of the pack.

When people innovate, they may make mistakes because they are doing what has never been done before. The next time you switch on a light bulb, just remember what was said of its inventor, Thomas Edison. Edison’s teachers said he was “too stupid to learn anything.” He was fired from his first two jobs for being non-productive. Whilst inventing the light bulb, Edison made 1,000 unsuccessful attempts.

 

When a journalist asked, “How did it feel to fail 1,000 times?” Edison replied, “I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps.” Few organisations out there make room for mistakes and celebrate them when evaluating the performance of their employees.

Innovation comes from trial and error, yet if your employee keeps failing, you show them the door. Who is better value to any organisation, the innovator making mistakes with a breakthrough later or the tow-the-line individual who does as it is written with no improvement? Who among these two employees creates customer value? Creating customer value entails both product and process innovation. Who then should be rewarded better?

 

Sam Hlabati specialises in Systems Thinking and Reward Management. You can contact him on samhlabati@gmail.com

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