Originally published in the Rotman Management Magazine
By Ricardo Viana Vargas and Edivandro Conforto
WHEN BUSINESS LEADERS are quizzed about what it takes to succeed today, they tend to suggest the usual suspects. Innovation is one constant refrain. But, look around. While radical innovation is a common aspiration, incremental innovation is the more frequent reality. Very few products or services are truly innovative.
Is leadership to blame? Harvard Professor Rakesh Khurana estimates that anywhere from 30 to 40 per cent of the performance of a company is attributable to ‘industry effects’; 10 to 20 per cent to cyclical economic changes; and perhaps 10 per cent to the CEO. Our experience suggests this is a maximum figure rather than a mean.
Originality is similarly over-rated. Research by Costas Markides and Paul Geroski of the London Business School highlights the myth of the importance of being the ‘first mover’. Markides and Geroski point out that Amazon was not the first company to focus on online retailing; nor was Charles Schwab the originator of online share dealing. The commercial genius of Amazon and Schwab was to take existing technology and bring it to the mass market. Hardly original — but hugely successful. So, if it’s not leadership or originality, what accounts for innovative success?
The reality is that time and time again, the most innovative organizations are characterized by what we describe as relentless execution driven by a radical ‘can-do’ attitude and aptitude. They realize that the best strategies in the world will get you nowhere unless you relentlessly make them happen.
Consider how Henry Ford revolutionized the auto industry at the turn of the 20th century. More than 17,000 Model Ts were sold during the first year of production. Four years earlier, the world’s entire automobile industry produced 22,000 cars. In the 19 years of the Model T’s existence, Ford’s production total amounted to half of the world’s auto. Along the way, the entrepreneurial crowd that had set out to conquer this new market became a select few. In 1914 the Ford Motor Company, with its 13,000 employees, produced 267,720 cars; the other 299 American auto companies with 66,350 workers produced only 286,770 cars combined. Ford had 48 per cent of the American car market, with US $100 million in annual sales.
Ricardo Viana Vargas is Executive Director of the Brightline Initiative, a coalition led by the Project Management Institute together with leading global organizations dedicated to helping executives bridge the gap between strategy design and delivery. Coalition members include The Boston Consulting Group, Bristol-Meyers Squibb and Saudi Telecom, and academic partners include the University of Tokyo Global Teamwork Lab, Technical University of Denmark and the Blockchain Research Institute. Edivandro Conforto is Head of Strategy Research for the Brightline Initiative.