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Beyond Insurance
Creativity and innovation
The one-two punch to knock out your competition
By Scott Addis
On December 17, 1903, a man walked into a restaurant in Norfolk, Virginia, to announce that “there are two loony Yankees down at Kitty Hawk trying to learn to fly.” Little did this man realize that this curious pair of innovators would achieve the first powered, sustained and controlled flight of an airplane. Orville and Wilbur Wright would survive this flight and many others.
Credit cards first were introduced in the 1920s so that automobile owners could purchase gasoline easily and efficiently. As companies such as American Express and Diners Club made it possible to purchase meals, lodging and merchandise with the swipe of plastic, the concept of the credit card took off.
In 1968, a scientist named Spencer Silver was researching ways to make 3M’s adhesive tape stronger. He failed in that attempt but discovered something new—an adhesive strong enough to stick on many surfaces but that could easily be removed and reused. In 1977, Post-it® notes hit the market. The concept did not catch on immediately, as consumers could not imagine why they would need such a product. Only when 3M distributed free samples did people understand and appreciate the versatility of the little sticky notes. Once this happened, the consumers’ imagination ran wild.
What do the Wright Brothers, the credit card and Post-it notes have in common? Creativity leading to innovation.
Creativity is the act of producing new ideas, approaches or actions, while innovation is a new way of looking at and changing them.
Creativity is always the starting point for innovation. People who have a gift for creative innovations tend to differ from others in three ways:
• Expertise—specialized technical knowledge in a particular discipline
• Creative thinking skills—flexibility and imagination as they relate to problem solving
• Intrinsic motivation
The ability to “think outside the box” is best supported in a flexible, open, nurturing environment with a leader who sees his or her primary role as supporting rather than directing. Creative people require this kind of environment to invent, imagine, problem solve, and create fresh ideas and concepts. Creative ideas emerge when preconceived assumptions are discarded and attempts at new methods that seem odd or unthinkable to others are explored.
Culture of creativity
Commoditization is a huge issue for the insurance and risk management profession. It is evidenced by ferocious price competition, leading to lower prices, margins and profits for agents, brokers and carriers. Unless an agent, broker or carrier offers something unique or differentiated, price will win every time. In today’s fast-paced, turbulent marketplace, it is critical that industry leaders understand the importance of creating a culture that fosters imagination, originality, diversity of perspectives and fresh ideas.
Innovation involves acting on creative ideas to make a specific and tangible difference in the domain in which the innovation occurs. It is the lifeblood of a successful business. Without it, there is stagnation. With it, there is energy, excitement, differentiation, value creation, passion and purpose. Innovation is a dynamic process of continually considering alternative means of delivering products and services, improving customer experiences and opening new markets. Innovation is the single most essential element to aggressive top-line growth and bottom-line results. Organic growth, profitability and agency value are dependent upon innovation.
Seth Godin, the internationally recognized best-selling author of Purple Cow and The Big Moo, states: “The only way to grow is to be remarkable. The only barrier to being remarkable is your ability to persuade your peers to make it happen. You will grow as soon as you decide to become remarkable—and do something about it.” In other words, be creative and innovative.
Establishing a culture of creativity and innovation is not easy. It requires a management process comprised of specific tools, resources, rules and discipline. Think of innovation in terms of planting seeds for a vegetable garden or flower bed. The right combination of soil, water, sunshine and air will determine how well the plants grow. For innovations to thrive, the conditions must be right.
Research indicates that there are five essential ingredients in the recipe for innovation: leadership, acceptance of failure, openness, patience and motivation.
Leadership
The innovative leader is a fearless visionary committed to backing bold ideas. He or she is keenly aware of the benefits of an environment where people feel comfortable and confident in voicing opinions about the firm’s business model. The innovative leader also understands the implications of rewarding creative thinkers.
The innovative leader encourages questioning, risk taking, openness and adopting a healthy attitude toward failure. He or she encourages the staff to challenge the status quo through questions such as: Is there a better way? What if we…? What would be the impact if…? How would the customer react to…?
Many organizations—especially larger ones—have hierarchical structures that impede idea innovation. The innovative leader recognizes this and responds accordingly. Innovation cannot flourish unless the barriers to creativity are removed to foster a culture of collaboration and free flow of ideas.
Acceptance of failure
Even the most beautiful garden contains weeds. Innovative organizations must not only water and fertilize but also kill off ideas that hold no potential for future growth. The acceptance of failure is a necessary step in the process of innovation. The willingness of a senior management team to be open and tolerant of failure encourages people to explore new ideas, take risks and be up front about problems.
It goes without saying that failure can affect an organization’s bottom line. It is for this reason that a system of checks and balances is required to spot potential problems so that necessary alterations can be made. Open discussion and dialogue are the best remedies to avoid costly failures.
In innovative cultures, employees are encouraged to expose their ideas for early feedback and collaboration. If an idea does not appear to have merit, alternative strategies should be explored in a constructive setting before the idea is put to rest.
Openness
FedEx has a corporate-wide initiative that it calls “purple promise”—each employee’s commitment to making the FedEx experience remarkable. This shared mission encourages everyone at FedEx to suggest ideas—from employees who sort and deliver packages to those who answer phones, maintain planes and develop new IT systems.
While innovative breakthroughs sometimes come from a single source, the vast majority of innovations draw on many contributors. Open-source innovation—the ability for a person to tap into the ingenuity of others—offers enormous potential for creative output.
Creativity flourishes in a vibrant culture that encourages people to imagine, think about possibilities and have the freedom to innovate. Positive cultures have open channels of communication that encourage people to bring forward new ideas so they may be captured, vetted and prioritized. These channels include, but are not limited to, casual brainstorming sessions, strategic planning sessions, suggestion boxes and online tools.
Patience
The adage “patience is a virtue” applies to the process of creative innovations. Patience is required if innovation is to thrive.
In The Big Moo, Seth Godin states: “There isn’t a logical, proven, step-by-step formula you can follow. Instead, there’s a chaotic path through the woods, a path that includes side routes encompassing customer service, unconventional dedication, unparalleled leadership, and daring to dream.”
In some cases, innovations take time because corporate infrastructure must be tweaked. History taught us that the automobile was a plaything until highway systems were built. The telephone system didn’t work until millions of miles of wires were strung. Innovative leaders demonstrate patience to let creative ideas ripen. “The Purple Cow is not a cheap short cut. It is, however, your best (perhaps only) strategy for growth”, states Godin.
Motivation
Creative ideas come in spades when people are motivated. An uninspired employee is not likely to wrap his or her arms around a problem. On the other hand, a motivated person can’t wait to find a solution to a challenging issue.
The keys to motivation include intellectual challenge, independence and appropriate matching of a person to a challenge. When an employee believes that work is meaningful, he or she will explore, design and build. 3M embraced the practice of letting researchers spend a significant percentage of their time on projects of their own choosing. Google mastered a similar formula. Both companies noticed enhanced motivation when the employee was given ownership of a project that was appropriate and intellectually challenging.
The recipe to create an innovation culture: leadership, acceptance of failure, openness, patience and motivation. This combination will create the one-two punch to knock out your competition.
The author
Scott Addis is the president and CEO of The Addis Group and Addis Intellectual Capital. Scott can be reached at saddis@beyondinsurance.com or (610) 945-1019. |
