At Closed Loop Consulting, we have always believed that an organization must discover, discuss and communicate their “Purpose” to the entire company, perhaps even to their customers. Understanding the purpose of the company, as well as how each functional discipline or individual department contributes to that purpose is also critical to an organization’s success. Most organizations call this their Mission Statement. To grow the business, organizations will develop a Vision Statement that helps to define what it wants to become; it’s “New Purpose”. This new purpose is often driven by the competitive environment it finds itself in, and the imperatives of the changing markets it serves or wants to serve. The outcome of all this, if properly facilitated, is a robust Strategic Plan for the organization. An organization must keep its purpose and its strategic plan in focus always, as this should guide the decisions made regarding the funding of innovation.
At a recent aviation industry conference, there was a discussion about Innovation for the airline industry, and that innovation should not be restricted to a set of requirements or business needs. I’m glad there are organizations like this with unlimited budgets and the resources to explore new technology. However, I don’t believe this is what an airline’s purpose is. “Innovation with a Purpose”, is why many organizations, including airlines, fund an R&D department. Most airlines depend on the supplier base to provide that innovation, and buy whatever it is that they are offering because it is the next “cool” thing, or mandated technology by regulation. While this has been the way the industry has operated in the past, Innovation with a Purpose is becoming necessary to meet airline customer demands, the growing competitive environment the airlines are facing, and with the demand airlines and IATA are forecasting in the next several years.
Finding innovative ways to solve business needs, as defined in the Strategic Plan, is how this R&D investment pays off for an airline, whether it’s done internally or externally. Everyone is interested in innovation—in innovative strategy, technology, products and services. Identifying an idea that can lead to Innovation with a Purpose, most often comes from within the organization. For example, two million suggestions were made in a year at Toyota through the employee suggestion scheme, and 85 percent of them were adopted into the business. That could not happen without a strong, consistent Purpose. Utilizing the “Corporate Knowledge” found within the organization can produce amazing results. It takes strong leadership to recognize that corporate knowledge, to listen and to plan accordingly.
With all of the Strategic Planning sessions I have facilitated, I find most companies are great at identifying and defending their existing strengths, some of which do not include innovation. However, patents expire, consumer tastes change and competitors come up with new ideas. Not investing in innovation, regardless of how it is achieved, is in many cases the beginning of a death spiral from which it is very difficult to recover from. The same can be said for Innovation without a Purpose. Reliance on innovation for the sake of it, has often led companies away from their Purpose, and into a series of expensive blind alleys. This occurs when there is no sense of purpose that guides the innovation process.
Innovation in the airline industry in the past several years has been focused on efficiencies of flight, and on the customers the airlines serve. All great things. However, many of those projects failed to provide the promise they had intended due to poor or unclear requirements. In 2005, Booz Allen Hamilton conducted a study of the one thousand biggest spenders on innovation—the companies with the largest research and development budgets around the world. They found no significant correlation with any measures of corporate success. None. Not profits, not revenues, not growth or shareholder returns. In other words, the simple decision to invest in innovation is not enough. How you invest, and especially how innovation serves a larger Purpose, determines the value of your investment and the promise of a return on that investment.
This is why the Closed Loop process works so well. We facilitate a process that keeps a focus on the Purpose of the organization, and the departments that support that purpose. We help identify those internal suggestions/requirements, link them to others within the organization who have the same or similar business needs, and develop a set of requirements from which the innovation will support the purpose of the business. The Big Data phenomenon in the airline industry makes this process an imperative for all airlines, otherwise the data will cost more than the value it was to provide.
Purpose makes an innovator more aware, or sensitive, because it is itself a response to the environment, and one that engages the innovator. We might even say that a Purposeful response, if genuinely felt, is an innately innovative response because it provides a context for paying attention to the needs of the world outside, rather than technology for technology sake. How many times has a supplier invested time and energy in an airline to clearly understand that specific airlines purpose, its business environment, the markets it serves, and how they operate? The airline industry is not a cookie cutter industry when it comes to operational efficiencies and customer service.
The innovator has every reason to identify the essence of practices in other industries and repackage them for his own use like Aristotle Onassis, who pioneered cruise ships by borrowing from the hotel industry. The innovator may reconfigure components into new products, like the engineers at Sony who developed the Walkman. The innovator may glimpse potential benefits in new technologies, like Apple who worked on the graphic user interface and helped to create a disruptive new technology call the Electronic Flight Bag (EFB). He or she may simply see economic logic in a situation masked by current convention. This is why we continue to preach that airlines must not automate the status quo, but first determine, “what problem are you trying to solve”?
This focused effort to bring about change within an airline can only be accomplished by a facilitative approach that ensures all disciplines of the airline are included. The way the supplier base can best serve the industry, is to provide solutions that meet a set of robust requirements that help integrate the airline versus the way it always been done, selling products to each department individually.
With the pace of technology advancements today, Innovation with a Purpose will have a dramatic effect on the competitive landscape an airline finds itself in today, and in the future, but only if it is designed and implemented at an organizational level. What a powerful position it is to clearly represent your requirements to the suppliers based on a purpose and a vision as an organization versus just one department. Airlines can change the way solutions are innovated, versus purchasing technology looking for a problem to solve, if they have the insight to “Innovate with a Purpose”.