In an era that is continuously in flux, innovation is a must for business success. Making a good product and following in others’ footsteps will no longer cut the mustard.
As a follow-up to their hugely successful book The Knowledge-Creating Company, Ikujiro Nonaka and Hirotaka Takeuchi wrote The Wise Company. It contains an astute exploration of the fundamental problems that cause businesses to fail and how to overcome them. The authors also discuss the meaning of true innovation.
At the heart of their message is the importance of wisdom as opposed to knowledge. It is the practical steps taken as a result of knowledge, rather than simply the possession knowledge itself, that really count.
So how can business owners avoid becoming a cautionary tale, in the same way that Kodak, Blockbuster, and General Motors did?
The first piece of advice that the authors dispense is to avoid basing decisions solely on specific data points. An example is knowing the price an audience is willing to pay without the context of what consumers are looking for in the product. This lack of context makes the price point data far less helpful when making strategic decisions. Indeed, it could even prove misleading.
In addition, conversation and human connection form a crucial part of fostering creative innovation. The authors explain the Japanese concept of Ba: a group of people coming together to generate ideas and speak freely. By creating an environment in which it is easy to talk, business owners can be sure that innovation will swiftly follow.
Whether it is created in formal meetings or informal settings, make sure that employees feel secure enough to speak their mind. This can sometimes be difficult if someone wants to voice an unpopular opinion, so make it clear that all opinions are welcome. Similarly, establish the purpose of the discussion to give your team direction. A shared goal that all team members buy into will always make conversation more productive.
Making money is an important goal for any business to continue to thrive, but profits shouldn’t be the sole motivator. If they are to thrive in the long term, every business must consider how to do so in a way that benefits society.
The authors give the example of company Fast Retailing, owner of UNIQLO, and their initiative 10 Million Ways to HELP. Since 2015, the business has donated 10 million pieces of second-hand clothing to refugee families. This is just one way that founder Tadashi Yanai is ensuring that his business gives back to society.
One of the key messages in the book is that it is consumers who will ultimately decide how successful a business is. By helping to create a better world, consumers will be much more likely to buy into your brand and support your success. Focus solely on profit, and chances are that rapport will be lost, along with your business.
The leaders of a business, according to the authors, must lead by example when it comes to inspiring their teams to innovate.
They must draw on experience, exemplified by Gen Terao’s world-class toaster inspired by his experience of the perfect slice of bread. Terao strove to create the best toast in the world, because he knew first-hand the joy it would bring.
Leaders must communicate clearly and evocatively. Consider Earnest Shackleton’s promise of great danger for little financial reward, but honour and recognition upon success. When he advertised this in search of recruits for a mission to the South Pole, thousands responded. They were convinced by his directness but also inspired by the emotive promise of honour upon return.
Finally, leaders might sometimes need to rally their teams in unusual ways. The authors refer to Steve Jobs’ outlandish request for a new type of glass to be created within 6 months. It may have seemed absurd, but his belief was enough to rally the team to achieve the impossible.
These stories of businesses young and old show how wisdom, and not knowledge, is a business owner’s greatest ally. While the path to success may be straightforward, it’s certainly not easy to follow. By proceeding wisely, the authors suggest that success is within reach for any business owner. Lead by example, create a culture of conversation, and take care of society as well as your business.