Culture & Innovation – Pt I

I have long contended that innovation lies at the intersection of creativity and diversity. My argument is that to get real innovation in an organization requires a well managed, diverse team of people, with the freedom to try new ideas and develop new ways of doing things. The problem as I see it is that most organizations are not organized or equipped to allow that level of innovation.

 

My favorite example of this point is a company that I have come to admire greatly.  Johnson & Johnson Consumer Companies is an example of a well run organization with a strong inclusive culture. J&J is an example of a company not only espouses their values, but actually lives their values. The well-documented, J. and J. Credo is a living document that guides the decisions that J&J leaders make every day. Most of you are aware of the famous Tylenol scare in which Johnson & Johnson set a high bar for responding to a corporate crisis by recalling all Tylenol product when there was just a moderate to slight possibility that some of them may have been tampered with. It was a costly decision, but totally consistent with the Credo.

Many of you may not be aware that that was not an uncommon occurrence. I can personally cite at least five other occasions, which did not get headlines like Tylenol, but which illustrate J&J’s adherence to its values. The most recent was their decision to withdraw their plans to purchase a company called Guidant.  That decision was due largely to the fact that Guidant was found guilty of hiding the fact that their personal defibrilators were potentially dangerous to consumers. Upon review of that behavior (hiding the truth), it became clear that Guidant would not be a good match for the J&J culture, despite the potential financial benefits.

While I admire J&J’s culture and adherence to ethics, I also observe that J&J, like GE, Cisco, and other companies, is not designed for innovation. J&J’s business model relies heavily on its marketing and sales prowess. Recognizing the businesses that they are in, they pay special attention to entrepreneurial ventures that are generating new ideas that could be useful in serving medical providers and consumers of health and personal care products.  Once J&J Thinks that the products are viable and a moderate market has been established, they buy the company. The obvious benefit to the acquired company is while they could produce sales of a hundred million for their product, J. and J. could produce sales of one billion. It is a model that works and takes full advantages of J&J’s strengths. It also illustrates why J&J is not likely to be a paragon of innovation anytime soon. Instead of growing through innovation, J&J just buys innovation.