“India is not leveraging the diversity it has in abundance,” says Frans Johansson, CEO, Medici Group

25/02/2013

Frans Johansson is an author, entrepreneur speaker and the ultimate guru of practical innovation. His bestselling book - The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts and Cultures, translated into 18 languages, was featured as one of the top 10 best business books by Amazon.com and selected as one of the best innovation books of the year by several organizations. One of his recent books, The Click Moment, focuses on ideas and moments that successful leaders must leverage to unleash innovation and growth in an unpredictable world.

Frans has lived all his life at the intersection, where ideas from different fields and cultures meet and collide. Raised in Sweden by African- American-Cherokee mother and Swedish father, he earned his B.S. in Environmental Science from Brown University and MBA from Harvard Business School. He later founded both a Boston-based software company and a medical device company operating out of Baltimore and Stockholm, Sweden. Frans has written extensively on healthcare, information technology and the science of sport fishing and has been featured on CNN's AC360, ABC's Early Morning Show and CNBC's The Business of Innovation series along with Jack Welch and Muhammad Yunus. Founder of The Medici Group, today Frans advises Global 1000 companies such as IBM, Walt Disney, Mass Mutual, Johnson & Johnson and Nike among others, as well as startups, venture capital firms, government agencies, and universities around the world.

Through his books and in his presentations, Frans clearly shows how the best ideas and innovation come from collaboration between people with diverse experiences, skills, perspectives, expertise, backgrounds and cultures. Simply stated, Frans is known for making a business case for diversity.

In an exclusive interview with SHRM India’s Sanjay Joshi, Frans fields a volley of questions on a subject he loves and knows best – innovation.

Excerpts:

SHRM India: How do you define an innovative firm? Which type of innovative activities are best suited in the Indian context - "new to the world" or "new to the market" and why?

Frans Johansson: An innovative firm is one, which is able to respond to the changing environments through unconventional solutions, and is able to do so repeatedly. The innovations can happen at the level of the strategic issues facing the firm, or within the operational activities of the firm. They can involve products, services, business models, recruiting strategies, or marketing – anything that enables the company to outperform.

These unconventional solutions are not necessarily only accidents, but outcomes of well-designed processes, and a consciously nurtured culture. In the Indian context, both the activities are relevant. The local conditions including changes in the business environment are best understood by the Indian companies, which makes them naturally suitable to innovate for their market. In addition, there are some unique ways in which developing countries manage effective results through optimal usage of resources and in the light of severe constraints on certain fronts. There is a good opportunity for Indian firms to scale-up their solutions in this optimal manner to cater to the global market as well.

SHRM India: The GE Global Innovation Barometer 2013 outlook is just out and most Indian executives do not rate Indian organizations as innovative in products and business processes. Where do companies typically go wrong when trying to decide how to innovate?

Frans Johansson: Companies frequently go wrong in a few places when it comes to innovation. First off, most executives tend to look at other companies in trying to figure out what works and what does not. But the end-result is that you will end up looking just like other firms. So how do you prevent that? Diversity is key. By bringing together people who may have lots of different perspectives on a particular problem or opportunity, you increase your chances of standing apart.

India, in fact, is not leveraging the diversity it has in abundance. Innovation has not been made a part of culture in most organizations we have seen. There are tremendous gains that could be had in this area.

Another common problem has been a company’s need to accurately predict just what idea is going to be successful before actually trying it. But the most innovative firms in the world understand that such predictions are impossible to get exactly right. So they spend less time analyzing and predicting – and more time testing new concepts and products quickly.

In order for Indian companies to see global recognition and lead the next stage of globalization, they need ‘new to the world’ innovations. This can only be done with a solid process that encourages, motivates and drives people to think differently. The copying or reverse engineering models of China seem to be a rather easy way out for most companies. However, the inherent uniqueness is not being tapped in this process. 

SHRM India: What is your take on the now popular, indigenous concept of Jugaad or frugal innovative fix as against more structured innovation popular in the West?

Frans Johansson: Innovation is a tricky thing. Different contexts require different approaches. It is clear that an overly structured approach to innovation can kill it. But it is also clear that no structure will kill it, too. Finally, there seems to be very little correlation between the amount of money you spend on R&D and how innovative you actually are as a company.  

If you add all of that up, it seems that a Jugaad approach is perhaps better suited for an individual than for a corporation – but that elements of it can be incorporated into operations overall. A company has to strive for a loose structure where individuals and small teams are encouraged to experiment and innovate, preferably, with limited means until they know if their idea works. Small resources used this way are critical to how innovation hubs, such as Silicon Valley, operate and would fit well within an Indian context.

The Medici Effect, in fact, can give Jugaad innovation a process to drive it. Culturally, it will fit in with the Indian way. We talk about little or no resources initially, several projects in different directions simultaneously, and use of diversity. Our Strategic Innovation Engagement will help companies arrive at a breakthrough strategy, create several innovation engines within the company, and align people. The unexpected side benefits include leadership at different levels, teamwork and cultural change. Having a loose structure is better than no structure.

Medici advocates the many good things about both the western rigid structures and the eastern flexibility.  Innovation is based on the creative element of human capabilities. While structure has its own merits, there is a great degree of randomness that prevails in the domain of creativity. From that sense, Jugaad has a tremendous value. From a structure point of view, Jugaad needs to be integrated into the structural aspects of innovation. In order for the innovation initiatives to succeed, companies need to have formal reviews and metrics, too.  

SHRM India: The interplay between workforce diversity and innovation has been the subject of many studies over the years and remains a challenging complex. Further, innovation being largely a social activity, one that involves and affects people, it is rather rare and odd that HR is seldom mentioned in innovation conversations. Beyond tying performance management to fuel innovation and sourcing creative talent, what are some of the ways in which HR professionals in India can embrace and foster innovation? Are there any standout examples of HR transformation you noticed among Indian companies?

Frans Johansson: The real issue is that in many organizations, HR is not aligned to organizational strategy. They often continue to operate in silos running their conventional roles with little regard to how they can strategically contribute through the people practices. Innovation needs to be a strategic focus in the organization, and HR professionals need to align themselves to this area of focus. Often, we hear CEOs talk of HR as a business partner. And, companies have been talking about the holy grail of HR, the ROI of human capital. Innovation is one thing HR can, indeed, use to drive the business partner angle.

Diversity is another area HR can contribute to drive innovation. Our clients have created groundbreaking innovation through the explicit use of diverse teams. So HR managers should look at how they can increase the diversity of the people they hire (fields, gender, ethnicity, industry). They can also play a far more effective role in encouraging employees to work across silos, departments, hierarchy and gender, to name just a few. 

This might be the most effective way to create the Medici Effect. As you have mentioned in your question, it is all about people and nothing else. And, if HR is not involved in it, then what on Earth is HR for?   

SHRM India: Please share some of your action-oriented recommendations to unleash India Inc's innovation potential and leverage traditional knowledge into revenues. 

Frans Johansson: 1. Consciously deploy diversity that exists at every level in Indian companies. Recognize that every individual in a group can add great value based on his or her background and culture. Encourage them to contribute their thoughts in ideation processes. The Medici Innovation experience outlines a powerful method to do so.

2. Ensure that strategy formulation doesn’t remain only a numbers driven budgeting exercise. Integrate idea generation around strategic issues into the process. That is, if you want breakthrough strategies.

3. Make innovation a central pillar in the overall organizational strategy. This will help the organization to build the value chain and culture revolving around innovation. 

SHRM India: In today's highly complex and random business environment, how can organizations increase the number of 'Click Moments' to find relevant creative solutions? In particular, how is 'The Medici Effect' shaping up in corporate India for intersectional innovations?

Frans Johansson: Some pointers on increasing click moments:

    i) First and foremost, tap the diversity. Likelihood of Click moments happening is much higher in a field where the Medici Effect is active.
    ii) Keep experimenting – Passionately try a lot of new things. Encourage not so-logical ideas.
    iii) Make a lot of small bets and then push big behind the ones that look as if they might take off.

Medici Effect has started to take root in India. The Medici Group is catalyzing this process by a strong presence in the country. There are some early successes which are very encouraging, and surely, they will be built upon. The Birla Group and the Tata Group are already making this as central to their innovation agenda.

Sanjay Joshi is Editor, SHRM India.