Practice makes perfect

Entrepreneur, Sept, 2002 by Katherine Catlin

INTRODUCING THE TOP INNOVATORS OF...1989. AS YOU WOULD IMAGINE, THEY'VE DONE A LOT MORE INNOVATING IN THE MEANTIME.

In today's turbulent world, your competitive edge depends on your ability to innovate. With rapidly changing markets, values, behaviors and ways of doing business, you must respond creatively to be profitable. Those who don't lead with innovation lose the competitive battle.

In 1989, I interviewed the CEOs of six companies that had just won awards from the Smaller Business Association of New England (SBANE) for "outstanding success in developing an innovative idea, method or device, with a proven correlation between its innovative qualities and its performance." Having started a consulting practice focused on planning and managing rapid growth, I wanted to explore how dedication to innovation supports successful growth.

I recently went back to talk to three of the companies to find out whether they had sustained their innovative edge over the intervening years, a volatile period in which most businesses experienced numerous economic, technological and competitive twists and turns. I also wanted to know whether their innovative capabilities were still driving growth.

In all three cases, the answer to both questions was a resounding "Yes!"

Each company I revisited has undergone impressive growth, despite major challenges, including dramatic shifts in each of their industries. Each company continues to innovate by re-evaluating, reinventing and repositioning itself in the face of every type of survival test that can be thrown at an organization by to day's demanding business climate.

The three businesses I caught up with provide ideas about how you can build and sustain innovation in your own company. One key is for the thirst for continuous innovation to be driven from the top every day. (See "10 Secrets to Leading Innovation," page 72.) Give your employees the model they need to make innovation a way of life, which, in turn, will make growth a way of life for your business. Here, then, are the stories of three highly successful organizations where innovation is the lifeblood that drives success.

KRONOS INC.

CHELSMFORD, MASSACHUSETTS By CEO Mark Ain's count, the company he founded 25 years ago has had to reinvent itself five times to keep up with changes in technology and the market. The company was still in its first incarnation when SBANE awarded it for "revolutionizing standard operating procedures by creating an electronic time clock system tied into payroll and gaining 10 percent market share in a big-company market." At that time, the time clock manufacturer had $39.6 million in sales and 400 employees. Now a leading labor management software vendor, Kronos has $293 million in sales and 2,100 employees. Ain intends to double that figure in the next four years.

Kronos has increased its acquisitions activity at a blistering pace in the past two years. In January, the company purchased a division of one of its competitors, SimplexGrinnell's Workforce Solutions, an addition of 8,000 customers to the 30,000 it already had. The purchase was a milestone because, says Ain, "Simplex was the gorilla in our market when we started."

Ain says a key to the company's continuous growth--and to staying innovative--has been maintaining a willingness to redefine absolutely everything about the business from its mission to his own role. For example, when Kronos discovered that companies wanted to keep track of white-collar employees the same way they track hourly employees, Kronos expanded its mission and started developing products for that market.

As for the evolution of Ain's own role: In the beginning, he was the leader who did everything and made all the decisions. Then he built a strong management team that could share leadership responsibilities. More recently, he has removed himself from day-to-day operations and primarily devotes his time to issues other people don't have the time or perspective to consider.

"We keep changing how we manage the company to reflect the task we have today, as opposed to last year's task," says Ain. "A big part of my job is to stay alert for big challenges. I focus on things like how to find the right blend of process vs. innovation and how to integrate the people and products of our acquisitions."

Ain says Kronos instills innovation as a way of life by regularly and systematically gaining customer knowledge and spreading it throughout the organization, staying abreast of technologies still two or three years down the road, encouraging employees to constantly re-examine and rethink what they're doing, and allowing them to make mistakes without being punished. "When we make acquisitions, the people who join us often can't believe the culture we have here," Ain says. "Usually we buy a company and leave the same management team in place, but we produce results that weren't possible when they were on their own. It's all because our culture empowers people. We don't shoot people for making mistakes; we just try to help them figure out how to not make those mistakes again.