Diversity and variety as the secret ingredient for innovation
Corporate Innovation: Developing new ideas, products or business models
Many companies are increasingly evolving from lead suppliers to subcontractors. Innovations? Not a chance. One ingredient is needed to make employees as individuals or an entire company more innovative. And this ingredient is called diversity. Diversity drives innovation. At the same time, companies with greater diversity can improve productivity, profits and employee motivation.
Think of innovations such as smartphones, tablets, WhatsApp, artificial intelligence or blockchain. Compared to the entire history of mankind, we have made a quantum leap in our technology development in the last ten years. COVID-19 has once again turned the way we work on its head and given “New Work” a whole new meaning.
Companies need to adapt themselves, their culture, products and services accordingly to remain competitive. Today, the winners are clearly those companies that can make the most of their data. Be it gaining new insights about their customers, fully automating processes or making better decisions.
In Germany, however, we see few truly data-driven companies. Our lead industries have rested on past success for too long. Where innovations are being driven forward, the primary focus is on efficiency gains. So how can processes be automated to cut costs, for example? There’s nothing wrong with that at first. But what many companies miss out on is using digitization for innovation. Developing new products, new customer experiences or even new business models. Instead, Germany’s leading industries are increasingly evolving from lead providers to suppliers.
The British startup Octopus Energy, for example, wants to become a kind of Netflix of the energy industry. It has developed a technology that is intended to bring supply and demand in the electricity market together more quickly and flexibly. And in the process, they are collecting vast amounts of data about the end consumer. In this equation, local electricity providers are just a supplier without direct contact to the end customer.
Corporate DNA of the winners
What corporate DNA is necessary to be among the winners of the digital transformation?
In my view, successful digital transformation is based on three pillars:
- Digitizing and rethinking the (existing) business model
- Use of innovations and exponential technologies such as cloud computing or artificial intelligence
- Agile corporate management and development
Innovation is needed to implement one or all of the three pillars. Innovation is a term that is used quite inflationarily. It is derived from the Latin “Innovare”, which first of all only means renewal. Innovation stands for new ideas and inventions and for their economic implementation. In our ever faster changing world with products and companies that are becoming more and more comparable, innovations are becoming more and more important for securing sustainable success and existence.
But what is the ingredient for success?
Specifically, for employees to become more innovative as individuals or an entire company?
Imagine the following exercise: What words come to mind when you read the word chair? The most common words are dining room, sit, or furniture. Fewer people come up with terms like wheelchair or think of the yoga pose utkatasana – the chair or seiza – the traditional Japanese heel seat.
People build chains of associations in their minds. Chains of associations are efficient. They enable us to move quickly from analysis to action. But at the same time, they also inhibit our ability to think broadly. We don’t readily challenge assumptions. We instinctively act through old conclusions and erect barriers against alternative possibilities.
In contrast, creative minds tend to make unusual associations because they engage in what is called divergent thinking. A person, with high associative barriers, on the other hand, will come to conclusions quickly when he or she is confronted with a problem because his or her thinking is more focused. He or she remembers how a problem was solved in the past or how it was solved by others in similar situations.
What is the consequence? We apply the same patterns over and over again. No innovation is created. No innovation, which we in turn need to bring new ideas, changes or whole business models into companies. (see: Brainstorming)
How can innovation barriers be brought down?
Breaking down our associative barriers can be a challenge. But it’s not impossible if you follow these tips:
1. Have contact with different cultures.
It has been proven that people who live and work in or with different cultures will break down associative barriers more easily (or even prevent them in the first place). Simply put, we broaden our horizons. Restaurant kitchens, for example, are often staffed by a wild potpourri of people from various cultures. Brought together on one plate, globalization has given rise to exciting types of fusion cuisine that open the gates to the world for us to enjoy in a new way.
2. Diversify activities
For creativity and new ideas, it is very useful to work in different jobs or projects. This is an effective way to generate unique insights and connect different areas of expertise. But unfortunately, many companies don’t work this way, which makes it difficult to diversify occupations. Often, moving between departments needs to be encouraged more or is even undesirable. My tip on diversifying activities alternatively: Find hobbies that have nothing to do with the job, read books about subjects you have no idea about, and try new things like continuously to have diverse experiences.
3. Try different perspectives
We can decide for ourselves how to look at every situation. If we always take the same perspective, we will tend to notice the same things. Leonardo Da Vinci is said to have said that you need to have looked at something from at least three different perspectives to understand it fully. Changing locations or design thinking / brainstorming methods to think about a problem or entire processes from a customer’s point of view are also helpful.
4. Work with different groups of people
People are attracted to others who are similar to you. This allows us to work together more harmoniously, but it does not encourage innovation. Even cracking the Enigma encryption system took a heterogeneous team of mathematicians, scientists, classical philologists, chess grandmasters and crossword puzzle experts. So it can pay to hire people you don’t like or even have a bad building feeling about. Do you follow the same groups of people on social media, or deliberately follow people who hold contrary opinions and perspectives?
So what is the success factor for innovation? – Diversity!
Diversity drives innovation. At the same time, companies with higher diversity can improve productivity, profits, but also employee motivation. A McKinsey study says that companies with the greatest ethnic diversity are 33 percent more likely to make above-average profits than those with the least ethnic diversity. And the study also says that having a lot of ethnic and cultural diversity at the board level increases the likelihood of success by as much as 43 percent.
So what’s the one thing you’re going to do this week to break down your associational barriers? And what can we do in organizations to drive innovation through diversity?
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