This blog entry proposes some lines of thought underlying structural innovation as a precursor for product innovation. I will put forth some ideas and models that could lead to a wider discussion and ultimately fine-tuning and elaboration.
In today’s highly competitive world of new emerging markets, power and production centers, the time has come to rethink traditional models of human capital management, teamwork, management practices, corporate branding and even product positioning. For years they have been the driving force behind wealth creation.
Since the industrial revolution, we (i.e. the Western World) have been leading the field in realizing higher value per product manufactured at an ever-decreasing cost. With the rise of massive production houses in China and elsewhere we have started to lose momentum. To stay ahead we are pushed towards reinventing the ways we organise work to remain competitive. Innovation as a business model could set the stage for greater business resilience and sustainable competitive advantage in years to come.
For far too long western economies have been adhering to the central thought of every employee maximising his/her own return. It would foster internal competition and, in line with the advice of James Lincoln, “bring progress, as competition will mean the disappearance of the lazy and the incompetent”. Reward systems were seen as the main driver for productivity, and gave rise to the ultimate assumption that a satisfied employee is also an engaged one.
Although employee satisfaction goes beyond reward alone, most companies, I venture to say, still very much focus their human capital efforts and management practices on keeping the employee satisfied (as in rewarded). We consider interesting bonus/reward schemes and career development as the most important elements of employee satisfaction and engagement. In most definitions of employee engagement, employee satisfaction has the center stage. Yet, being satisfied does not mean that over time one remains engaged. When looking more closely at the whole concept of engagement we notice that it is all about going the extra mile, to do that bit more than is expected of you because you, as an employee choose to, want to, like to. I talk about intrinsic motivation – internal rewards that are much more effective and robust as a motivation principle than their external counterparts.
In turn, these best practices of HR management can be used for external marketing purposes (personal branding through product identification)*, corporate branding (social responsibility aspect) and talent management thus making rapid product innovation a sustainable process. However, driving structural innovation is a great challenge given the existing power structures, corporate processes and management practices/mindset and assumptions that are in place and that have proven their worth in the past.
In conclusion, competitive advantage requires rapid product innovation and realizing continuously higher product value at an ever-decreasing cost. To make this sustainable innovative management practices (incl. HRM) and innovative forms of collaboration powering Hot Spots are necessary. In other words, it requires structural innovation as well.
* This basically means that GenZ will increasingly identify and portray themselves through the products they choose to consume (and thus the values they represent).