In summer of 2006, Boston Consulting Group released its annual Innovation study, in which they determined that innovation remains a top strategic focus for many companies: 72% of the 1,070 executives in sixty-three countries ranked it a top-three strategic priority. Furthermore, they demonstrated that innovation translates into superior long-term stock market performance: the twenty-five most innovative companies had a median annualized return of 14.3% from 1996 through 2005, a full 300 basis points better than that the S&P Global 1200 median.
How do they do it? All of the innovative companies (Apple, Google, and Toyota among them) share one trait: they focus on their employees, their customers, and the people who constitute the market in which they operate. They realize that innovation comes from people, that these people need to be supported, and that everyone with an idea should be heard. They encourage creativity and free-thinking, even if it means that company employees will wander down the wrong path now and again. After all, the harsh reality is that experience is the greatest teacher, and learning from mistakes is a heck of a lot better than not learning at all.
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“My first real job was at a business that I started at boarding school when I was 16. At that time, the Vietnam War was going on and the Paris student uprising had just occurred. I felt that school was a place where grown-ups were just trying to keep us busy. I decided to start a magazine that would address some of those issues. I didn’t even have a phone, so I used a public telephone at school to sell advertising for my magazine. Over a six-month period, I managed to raise about $6,000, which was enough to cover the cost of printing and paper, so I decided to leave school to start the magazine. Being a precocious, overly enthusiastic young boy, I managed to get a lot of big celebrities—James Baldwin, Vanessa Redgrave, Jean-Paul Sartre—to write or be interviewed for the magazine....
I started the magazine because I had a passion for what I was doing. That’s also why I went into the airline business, even though everybody I talked to told me that there was no money to be made there. I felt that I could make a difference. That’s the best reason to go into business—because you feel strongly that you can change things.”
Richard Branson, Chairman of the Virgin Group. From “Training to Work: Unit of One,” by Jill Rosenfeld. Fast Company, August, 2000.
“I think it’s incumbent upon business leaders to honor such [emotional and relational] needs by creating work cultures that are caring and frank, and that encourage people to grow both emotionally and socially—if only because such cultures create employee loyalty and increase productivity. Work should be a place of community, where people can be honest and genuine in their interactions. If you want people to care about carrying out your company’s mission, create a workplace that cares about them through policies as well as through relationships.”
Nathan Baxter, Dean, Chief Priest, CEO of Washington National Cathedral. From “Training to Work: Unit of One,” by Jill Rosenfeld. Fast Company, August, 2000.
