II Creating Change

The last policy for the change leader to build into the enterprise is a systematic policy of INNOVATION, that is, a policy to cre- ate change.

It is the area to which most attention is being given today. It may, however, not be the most important one—organized abandonment, improvement, exploiting success may be more produc- tive for a good many enterprises. And without these policies— abandonment, improvement, exploitation—no organization can hope to be a successful innovator.

But to be a successful change leader an enterprise has to have

a policy of systematic innovation. And the main reason may not even be that change leaders need to innovate—though they do. The main reason is that a policy of systematic innovation produces the mindset for an organization to be a change leader. It makes the entire organization see change as an opportunity.

Windows of Opportunity This requires a systematic policy to look, every six to twelve

months, for changes that might be opportunities—in the areas that I call “the windows of opportunity”:

• The organization’s own unexpected successes and unex-

pected failures, but also the unexpected successes and unexpected failures of the organization’s competitors.

• Incongruities, especially incongruities in the process,

whether of production or distribution, or incongruities in customer behavior.

• Process needs. • Changes in industry and market structures.

The Change Leader 85

• Changes in demographics. • Changes in meaning and perception. And finally: • New knowledge.*

A change in any one of these areas raises the question: “Is this an opportunity for us to innovate, that is, to develop different products, services, processes? Does it indicate new and different markets and/or customers? New and different technologies? New and different distribution channels?” Innovation can never be risk-free. But if innovation is based on exploiting what has already happened—in the enterprise itself, in its markets, in knowledge, in society, in demographics and so on—it is far less risky than not to innovate by exploiting these opportunities.

Innovation is not “flash of genius.” It is hard work. And this work should be organized as a regular part of every unit within the enterprise, and of every level of management.

What Not to Do There are Three Traps to avoid into which change leaders fall

again and again.

1. The first trap is an innovation opportunity that is not in tune with the strategic realities discussed in Chapter Two of this book.

It is most unlikely to work. The only innovation likely to succeed is one that fits these major realities— of demo

_____________ *These windows are described in considerable detail and with numerous examples in my 1985 book Innovation and Entrepreneurship (New York:

HarperCollins; Oxford: Butterworth/Heinemann).

86 Management Challenges for the 21st Century

graphics, of the changes in the distribution of income, of the way the institution itself and its customers define “performance,” of global competitiveness or of political and economic realities. But the “misfit” opportunity often looks very tempting—precisely because it looks truly “innovative.” But even if not resulting in failure— as it usually does—it always requires extraordinarily wasteful amounts of effort, money and time.

2. The second trap is to confuse “novelty” with “innovation.” The test of an innovation is that it creates value. A novelty only creates amusement. Yet, again and again, manage- ments decide to innovate for no other reason than that they are bored doing the same thing or making the same product day in and day out. The test of an innovation—as is also the test of “quality”—is not: “Do we like it”? It is: “Do customers want it and will they pay for it?”

3. And the third trap: confusing motion with action. Typically when a product, service or process no longer produces results and should be abandoned or changed radically, management “reorganizes.” To be sure, reorganization is often needed. But it comes after the action, that is, after the “what” and the “how” have been faced up to. By itself reorganization is just “motion” and no substitute for action.

These three traps are so attractive that every change leader can expect to fall into one of them—or into all three—again and again. There is only one way to avoid them, or to extricate one- self if one has stumbled into them: to organize the Introduction of Change, that is, to PILOT.

II Creating Change