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The Balance Between Innovation & Systems

Business is constant balancing act between innovation and systemization.

Consistently performing the actions that bring the best results should be the focus of any business venture.

To sit on these merits and not innovate can easily become the poison that causes businesses to suffer.

On the other end of the spectrum, to focus too much on innovation can cause chaos and lack of profitability.

In his classic business book Good to Great, Jim Collins tells the story of how Circuit City used both innovation and systemization in a self-reinforcing cycle to become a great company.

In 1973, Alan Wurtzel inherited the CEO position for Circuit City from his father. The company was close to bankruptcy.

Burdened by debt, in 1974 the company began a series of closely-monitored innovations after rebuilding the executive team.

They first experimented with warehouse showrooms. In 1976 they experimented with selling consumer electronics in the warehouse showroom format, and in 1977 the concept transformed into the first Circuit City store.

When this format proved to be successful, they began converting all their stores and by 1982 they had committed fully to the concept.

As they made the shift over the next five years, they generated the highest total shareholder returns of any company on the New York Stock Exchange.

Drawing lessons from Circuit City, we find the following guidelines for managing the dynamic between innovation and systems:

1. Dedication to truth.

When ego runs a company, truth goes out the window. Profitable, lasting companies are dedicated to uncovering and aligning with truth.

What is truth in business? Results. More precisely, results based on your stated goals and parameters.

This means that you need flawless data tracking systems in order to find truth in the first place.

2. Consistent, incremental change is better than massive, chaotic change.

Dramatic revolution always appeals to human nature, but wisdom dictates that we take small steps, measure the results, and build on them.

The parable of the tortoise and the hare is highly applicable here.

3. Stay in the trenches.

It took Circuit City a decade of hard work before receiving media recognition or seeing dramatic results. But patience and persistence won the day.

You have to be willing stay on course long enough to see results.

Jim Collins calls this the “flywheel” principle. He writes:

“Picture a huge, heavy flywheel — a massive metal disk mounted horizontally on an axle, about 30 feet in diameter, 2 feet thick, and weighing about 5,000 pounds. Now imagine that your task is to get the flywheel rotating on the axle as fast and long as possible.”

Initially, it takes great effort. You strain and struggle to get it to turn one time around in two or three hours. But you keep at it, and it slowly picks up momentum.

“Then, at some point–breakthrough! The momentum of the thing kicks in in your favor, hurling the flywheel forward, turn after turn…whoosh!…its own heavy weight working for you. You’re pushing no harder than during the first rotation, but the flywheel goes faster and faster. Each turn…builds upon work done earlier, compounding your investment of effort.”

Most individuals and companies are willing to put forth the sustained effort required to kick the flywheel effect into gear.

Every business wants to find itself where cash flow and success are coming, almost without effort. The price for the painful birth of a system has already been realized.

The balancing act, then, is to do what is working and continually innovate to meet your customers at the current level of their need.

Dedicate yourself to truth. Set up tracking systems and measure your progress. Discover what works and what doesn’t. Build on what works incrementally.

Then, stay in the trenches and watch your business take off…

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Carl Woolston is a business and marketing consultant with KGaps Consulting, a co-creator of the proprietary marketing methodology “Hub Mentality,”, and a co-founder of The Center for Social Leadership.

His expertise includes network development, marketing, web strategy development, lead creation, and lead capture strategies.

He and his wife Christy are raising their six rambunctious children in Bountiful, Utah.

Connect With Carl:

Email: carl [at] kgaps [dot] com
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The Balance Between Innovation & Systems