Business Exposed168
Means and ends; profits and innovation
My journey to study habitually innovative organizations also
showed me that it is actually not easy to remain innovative.
Sometimes rms come up with something really new, which
brings them great success. But once the rm becomes protable,
over time, it is as if it loses the urge to be really innovative and
creative, and come up with truly new products and services.
I guess it relates to the phenomenon of the success trap, as
discussed in Chapter 2. One innovation is doable; repeated
innovation is another cup of tea.
In search of repeated innovators, one of the things I always ask a
company’s executives is, “Why do you want to be innovative?”
Invariably, the answer is that they realize they need to innovate
in order to remain protable in the long run.
And this is a good point. You may be protable now, but if
you wait to invest in innovation till you see your performance
dropping – trying to innovate yourself out of the trouble
looming – it may be too late. True innovation has a long lead
time; starting to think about new stuff only once your old stuff
is beginning to show signs of decay often means you have left it
too late. Moreover, by then, you may be out of touch; once you
have stopped innovating it is very difcult to get back into it.
Over the past year or so, I have been examining a rather different
but consistently very innovative organization – as a matter of
fact, one of the most innovative organizations of its kind in the
world: the famous Sadler’s Wells theater in London.
Sadler’s Wells is a large theater (its main auditorium seats about
1,900 people) which is focused on modern dance. And it hosts
and (co)produces some of the most innovative productions in
the world. Moreover, it manages to consistently attract large
audiences and is – which is quite rare for such a theater – nan-
cially self-sufcient, very healthy and sound.
When I was talking to its managing director (Chrissy Sharp) and
chief executive (Alistair Spalding) about its many productions,
1697
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Making far-reaching decisions
how they are organized, the relations between the theater and
the artists, and so on, at some point I also asked them my usual
question: “Why do you want to be innovative?” They both stared
at me in silent disbelief . . .
While I was pondering whether they were wondering if I was
serious (or mad), thinking it was just an incredibly stupid
question, or considering stopping the interview immediately,
Chrissy nally stammered, “But . . . because we have to . . . it is
what we do.”
Then it dawned on me; they had never even considered the
question before.
And, gradually, speaking to many more people in the organi-
zation, I gured out that there is a subtle yet fundamental
difference between Sadler’s Wells commitment to innovation and
that of many of the businesses I’ve seen. Companies invariably
see innovation as a means to an end; you have to innovate in
order to remain protable. Sadler’s Wells theater views it the
other way around; you have to make a healthy prot in order to
be able to continue to innovate.
For them, prot is the means and innovation the end. Companies
often struggle to remain truly innovative when they are making
huge prots; the urge and feeling of necessity just inevitably
slips away. Not for Sadler’s Wells; they continue to innovate, and
innovate a bit more the more prot they make. It is not the big,
tried-and-tested projects that they have been running for years
that excite them, but the new, risky, creative productions that
no-one in the world has seen before that get their hearts racing.
They respect their established projects but invariably use the
prot they make through those to invent new stuff.
And I wonder whether more companies
should adopt this stance: where the organiza-
tion’s ultimate commitment is to innovation.
It is good to make a prot, and even better to
make a lot of prot. But innovation is what
keeps you healthy in the long run, and what
‘‘
It is good to
make a profit, and
even better to make
a lot of profit.
’’
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