Building The Perpetually Innovative Company - A Q&A with Kai Engel

The A.T. Kearney Best Innovator competition began in Germany in 2003, partly in response to rising concern among Western European companies that more sophisticated—and lower-cost competitors—from emerging nations were threatening their long-term profitability and perhaps their survival. Contest organizers wanted to spotlight great innovators to show how innovation is done.

Now held in 20 countries around the globe, the competition has yielded a wealth of insights into how companies can excel in innovation management. This annual benchmarking against the best in innovators focuses on the how-to of innovation and takes a deep look at what leading companies are doing to achieve better yield with their innovation strategies.

In Masters of Innovation: Building the Perpetually Innovative Company, a new book from A.T. Kearney, the authors highlight real experiences of the world’s Best Innovators from 10 years of results from the Best Innovator competition. You can read an excerpt here. We’ve also included lessons from leading innovators, such as Ferrari, STMicroelectronics, and Whirlpool.

Meanwhile, I recently had a chance to speak about innovation with Kai Engel, leader of A.T. Kearney’s Innovation practice in Europe, Middle East, and Africa, and co-author of Masters of Innovation.

Q. Innovation seems to be top of mind today. Why do you think business is so focused on innovation at this point in time?

A. I think there are two major reasons. One is that most of the core technologies that we apply in our daily lives, like driving a car or operating a washing machine, are mature technologies. There is a significant effort to get to the next level of innovation in those traditional technologies. The other is business is more competitive than ever, on a global basis, and the digitization of business is creating an opportunity for companies to differentiate themselves by making a change in the customer experience in different types of products and services. There is a sense that whoever gets to that next level of innovation first will have an advantage. And, remember that technology is changing at an unbelievably fast pace. In the end, it’s all about speed.

Q. Is innovation just another word for new product development? Or do you distinguish between the two?

A. We distinguish between the two. New product development is an integrated part of the whole innovation life cycle. But innovation is more than just new products. It is the result of in-depth consumer analysis; it’s reflecting on future megatrends, and then, putting those reflections onto certain trajectories based on the functional requirements that were identified. New product development may be the result of the needs that were identified during that reflection period, but product development tends to be quite push oriented. Innovation, on the other hand, is the result of insight into the emerging needs and dynamics of different markets. China, for instance, is quite different than Africa. That can’t just be triggered out of R&D and product development. I think the scope of innovation is at the front end of the cycle by understanding the different market needs, putting those into perspective to create ideas and initiate product development, and then, once launched, you fuel the continued development of the product right up to end of its lifecycle.

Q. Do clients come to you and ask: How do we become an innovative company?

A. Yes, to a certain extent. The real question is: What is an innovative company? We think of an innovative company as one that is able to better react to changing needs than its peers. There’s a significant cultural element attached to that. An innovative company needs to be able to put aside what it has done so far and reinvent itself in a new way. Think about Sony. For years, Sony dominated the home entertainment segment with the Walkman and Discman. Suddenly, the needs of consumers changed. There was a huge population of consumers who wanted to be entertained while they traveled and didn’t want to be limited to the amount of data stored on a disc. But Sony was locked into its own technology space and didn’t react. So, innovation is the ability to ask: Do we need to change what we do now, and is there a willingness to change within the corporate culture?

Q. Is innovation innate or can it be learned. In other words, do you think a company can become an innovator in the same way that you or I could take guitar lessons to learn something new? Or, does innovation have to be in a company’s DNA?

A. We do have methodologies that can be used to train and prepare an organization for innovation. However, in the end, a decision to innovate has to be made at the top. That is because being an innovative company requires a willingness to change and take risks. A leader has to make decisions around uncertainty. What we have observed is that it’s easier to create an innovative company when senior management is open to risk taking and has a mindset towards innovation. Certainly, there are tools and technologies that can enable the process, but at the end of the day, key decision makers have to foster an innovative culture for it to work well.

Q. What is the one take away you would like to leave with a reader of this excerpt, or the book?

A. I think I’d repeat what I said above. There is a whole suite of capabilities that is important in order to create the innovative company. But in the end, it’s always the people and culture that make the difference.

Click on Masters Of Innovation: Building The Perpetually Innovative Company to read an excerpt from the book. For more information about the book, click on the link.