Managing For Innovation
Originally published: 11.01.08 by Paul Grunau
You must evolve with the market to stay relevant, which means stepping outside of the business to move it forward.
As the owner/leader of your hvacr company, I imagine you spend a good portion of your time thinking about “what’s next.” Where is my industry going? What are my customers looking for? Most importantly, what can we or should we be doing that will differentiate us from our competitors in the eyes of our customers?
If you are not thinking about this and are instead busy “in” the business, then who in your organization is lookingahead and working on positioning your company to take advantage of the opportunities that change and evolution present? Someone better be!
As business, markets and customers evolve, we must evolve with them in order to remain relevant. In my experience, this can be a painful process. Even if things are going well, we must have the discipline to look into the market, talk with customers and industry experts, and form an opinion as to where we must improve or change to stay ahead of the evolutionary curve. This takes time and, usually, money. When I chat with others in the industry, I often hear an objection regarding change and evolution. It costs too much.
I agree the investment can be substantial,but what if you don’t make it? After all, isn’t your job about leadership? Your responsibility is to leave the organization better than you found it, to ensure its strength and vitality long after you are gone. If you have an “it costs too much attitude,” will you fulfill that responsibility?
In my opinion, managing for innovation requires that you are open-minded about making investments that should yield a return, as opposed to looking at what everything costs. An obvious example of this mentality is the evolution of the service and maintenance portion of our businesses. To this day, I encounter hvacr companies who have virtually no presence in the service and maintenance markets. When I ask them why they have made this choice, I usually hear the following: “If I’m going to get into the service business, I need all those people, trucks, tools, etc. The jobs are small, and there are a lot of invoices to manage and customers I’ll have to chase for my money. I can do much better doing large jobs. It’s a lot simpler.”
I think it’s safe to say that we all know the value of our service and maintenance businesses — deeper customer relationships, recurring revenue and higher margins. Yet, the investment required is what keeps many companies from fully developing this opportunity.
If you are committed to looking forward, I suggest you look inside and outside the industry. If you look at many of the more recent innovations in the hvacr industry: 3D modeling, communication, training and development, Lean principles, planning and pre-fabrication, etc. most of them migrated into our industry from other industries. In fact, it’s reasonable to say that our industry, in many cases, is a late adopter of innovation. One of the reasons, I think, is that we don’t face the withering global pressure that many manufacturing and technology companies face. Contracting remains a very local business with very little global competition, at least at the specialty contracting level. This is good in that we are insulated, at least for now. And it is bad, as we have not been as quick to adopt change because the pressure has not been as intense. I would argue that this makes the return on investing in innovation even greater in our industry, because so few are doing it!
In addition to looking at other industries and companies, I would also look at best-in-class companies. In my experience, the best companies are usually open about what they are doing, particularly if you are not competing directly with them. Look at joining a peer group or some organization that provides youexposure to other successful companies in your industry in a positive, mutually supportive setting. This will allow you to get to know other leaders, and potentially share ideas to improve your business.
Lastly, I would encourage you to enlist the collective brainpower of your team. Once your company knows by your actions that you are committed to innovation and change, they will be more forthcoming with their ideas. The powerin this comes when someone in yourorganization has an idea or passion forchange and improvement. You then have a great growth opportunity for that individual. Legitimize their efforts by giving them the resources and influence necessary, then make them the champion ofthe innovation. If successful, this allows you and your organization to work on numerous innovations simultaneously, each having an internal champion, while at the same time showing you the leadership capabilities of your team.
Innovation and change are scary to a lot of people, and it is human nature to generally resist both. As the leader of your business, you must take the initiative to drive this process, because no one else will. You must have an investment orientation and stop thinking so much about “what it costs.” Beyond that, look both outside and inside the industry for the leading companies. They are successful for a reason, and are often willing to share with you, provided they know your intentions are straightforward. Ultimately, you’ll be judged not by what you did, but by what happened after you left. That is when your commitment to innovation and change will pay the greatest dividends.
The Grunau Co. is a full-service mechanical systems company with more than 500 employees. The company provides expertise on design, construction, installation, and service and maintenance for the commercial, industrial and institutional markets.