How - Dov Seidman [29]
Many companies have no desire to Innovate in WHAT; it is simply too expensive. They say, “I’ll wait until he invents it and I’ll copy him.” Jack Welch, former CEO of General Electric (GE), was fond of pointing out that the game is not structured to reward the innovator.13 It is very hard to build path protection for your WHATs. Many throughout the world regularly infringe on copyrights, and numerous countries pay no attention to property rights or the concept of intellectual property. In many cultures, there is no word that translates as “intellectual property”; they cannot address the concept that someone can own an idea. Welch was so convinced of his idea that it is pointless to try to protect WHATs that he would continually disclose many details of GE’s business model and strategies in the company’s annual report—essentially making public GE’s WHATs. “We went to Jack and asked him why he was giving away the secret sauce by revealing our business models,” my friend Steve Kerr, GE’s former chief learning officer (CLO) and vice president of leadership development, told me over lunch on Wall Street near Goldman Sachs’ headquarters. Steve is also the former CLO of Goldman Sachs and a co-author of The GE Work-Out (McGraw-Hill, 2002), a leadership approach he developed as head of GE’s famed leadership development center at Crotonville, New York. He has long been recognized as a thought leader in the world of corporate management. Steve recalled about Jack Welch, “He told us, ‘There’s no secret to the what; the secret is in how. They can know our model, but they cannot do it. They can’t copy our hows.’ ”14
Welch was right. Beginning in the 1980s, American businesses began to Innovate in HOW. They focused intensely on process management, which I call the HOWs of WHAT. We now live in a time where winning is about HOW generally. Total Quality Management (TQM), six sigma, just-in-time ( JIT) inventory, kaizen, Enterprise Resource Planning (ERP), customer relationship management (CRM), human resources information system (HRIS), process reengineering, zero defects, supply chain management, customer service, safety management, BPO—process culture now dominates business practice, aiming to improve profitability by reducing inefficiencies at every stage of the product development process. Business recognizes what Welch saw so clearly: There is going to be one genius in a crowd of 100 who is so smart that she invents a cure for cancer; the other 99 people are going to win on HOW. The journey is as important to profitability as the goal, and process is the Way.
But a funny thing happened on the way to the Way. Everyone got pretty good at it. As companies reached the limits of process improvement, they leveled the playing field. Almost everyone now can reduce quality defects to infinitesimal levels, almost no one gets killed on the job when it can be prevented, everyone answers the phone on the second ring, we all have the same antitampering devices, and we are all drinking caffe lattes. We have commoditized process and performance in the same way we have so much else, possibly to the point of diminishing returns. (Wharton professor Mary J. Benner argues persuasively that the results of her 20-year study show that process management, which has risen to the level of fad, might even be strangling innovation. Benner argues that it encourages short-term, exploitive thinking that stifles bold invention.15)
There is one area where tremendous variability