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Organizations often face considerable difficulty in maintaining their innovative edge in the face of changing markets, technologies and demand. Companies that are strong innovators do consistently well as regards stock market performance. Over the past 20 years, 80 of the Fortune Global 500 companies turned in annual average of at least 5% organic sales growth. The shareholder returns of these firms were almost double those of the other Global 500 firms (Study conducted by Center for Organizational Excellence, Switzerland). Such success relies on concurrent innovation in Processes, Products, Business Models. Typically, Process Innovation serves as the primary driver for the other categories of innovation.
Several companies believe that increasing their R&D expenditure would enhance innovation and hence new product development. However, a recent study of public companies representing almost 60% of global R&D expenditures found that above a certain minimal level, there is generally no correlation between R&D spending and financial metrics such as sales or profit growth.
Yet some companies seem to be better at dreaming up great new products while spending less to do it. As a percentage of sales, Apple spends less on R&D than the average in its industry. The R&D budgets for two of Detroit’s beleaguered Big Three have been consistently higher than their industry average.
Productivity in an organization has a direct correlation with the morale and motivation amongst all members of the team. If people feel valued and realize how their work has a direct impact on the bottom-line, then thought, behavior and action are all aligned in the right direction.
Unfortunately, several organizations use fear as the primary driver of actions. Such a tactic might produce results in the short run but will destroy the business in the long run. In addition, it will kill all innovation. It is crucial to have a shared vision, complete alignment on strategy and clarity on goals for every team and every individual. When such a culture is created, people will take more ownership and productivity will show marked improvement.
At DestinHaus, we believe that Productivity and Innovation go hand-in-hand in every organization. We work on increasing the level of both in tandem and in creating the right culture such that the client organization can continue on that journey long after we have completed our assignment with them.
When we are brought in to evaluate the productivity in an organization and to suggest ways to improve it, the first thing we do is to examine the culture and the leadership that are prevalent. In a very short amount of time, we can diagnose the problem and prescribe the appropriate course of action. The root cause of the problem is the same across organizations, industries and regions, but the solutions need business insight and customization.
To increase productivity in an organization, leaders need to preach and practice the following in addition to creating a culture wherein all other employees do the same:
