The USA Today described Doug Hall as “part clown, part genius”. Everyone describes him as the leading expert on the topic of innovation, and he runs a place called Eureka Ranch near Cincinnati where his innovation work takes place. Innovation, of course, is the hot buzzword these days. Every company claims to be doing it, the business consultants have suddenly become experts in it, and every new product is now an ‘innovation’. Not all innovations are the same, however.

If you look at Hall’s web site, he offers two services: the fastest way to innovate and the smartest way to innovate. In the first one, he and his team will think of the innovation for you. In the second instance, they’ll teach you how to innovate. It’s the old ‘give a man a fish, feed him once; teach a man to fish, feed him for a lifetime’ adage. Too many companies don’t know the difference between the two.

In the lean world, there are very close parallels. There are kaizen events and six sigma projects, and then there are lean transformations. The first is a one shot deal - big effort to dive into some area and make a great big change. The second is an ongoing change mechanism. Give the plant a fish or teach it to fish - the choice is management’s.

The problem with having Doug Hall think of your next great product, making an improvement through a kaizen event, or having someone give you a fish is that the value starts to deteriorate the second you have the product, improvement or the fish. In the case of a Eureka Ranch innovation, every product has its life cycle. Competition heats up, technology changes, the world moves on. When that third party innovation has run its course, the company is right back where it started from. There is nothing permanent or sustainable to it.

The same is true of the kaizen event. The event concludes, the process is improved, then everyone goes back to work, but the world moves on, products and processes change with demand and technology. New customers come along with new demands. The improved process slowly drifts away from being the best as the environment around it changes. It will take another kaizen event some day to recalibrate it.

The point is that there is one time innovation, and there is an innovation to the process. A company cannot achieve long term success through the one time approach. The fundamental question is why the company did not develop the innovative product on its own? What is wrong with its new product development process that caused it to fail - and need Doug Hall to fix it. Having Doug Hall do its work and come up with the new product does not address that fundamental question. The solution is to use Doug Hall to install an ongoing internal process for innovation.

Lean is the same way. The big question is not how do we solve the problem - it is how do we fix the process so that the problem cannot occur again. The objective of lean is the development and implementation of management processes that are driven to continuously bring problems to the surface and solve them - to continuously improve. That cannot be achieved through projects.

The future does no belong to those who rely on inventions or improvement events. It belongs to those with superior processes.

I don’t think Darwin closed all the loops when he concocted the Theory of Evolution. Anyone who believes that all of this is a grand cosmic coincidence ought to calculate the odds of everything around us falling into place from a speck of big bang dust, then see how those odds play out in Las Vegas. His idea seems to perfectly reflect business, however, even if it doesn’t hold up so well as the explanation for all forms of life.

The basic logic behind Darwin’s theory is that all around the fringes of life are weird mutations, most of which quickly fizzle out and die. When the environment changes, however, one of those oddball mutants inevitably is exactly the right answer to survival in the new environment. The rest of the species either breeds with the good mutant, or its offspring is doomed.

There is much ado these days about ‘innovation’. I suggest that it is not nearly so important for a business to do all the innovating itself as it is to recognize the innovations around it. The innovators are the equivalent of Darwin’s mutations. Most of the innovations are doomed to failure and a colossal waste of money. There are long shot, start up companies and university labs on the fringes of just about any industry based on all sorts of dumb ideas, and most fail. Every now and then, however, one of those start ups has just the right idea – they redefine the industry.

We recently saw what happened to Kodak as they failed to recognize the power of digital photography. The technical innovation did not originate at Canon or Sony, or at any other big company. It was the brainchild of some obscure astronomy geek over thirty years ago. The big names in digital cameras are not the innovators – they are the ones who saw that the digital innovation held the key to survival in a new age, and bred with the mutant. Kodak failed to do so and they are roaring to extinction.

While most companies think of inventions and technology when they think of innovation, but it has to do with management practices, as well. Manufacturing is in a period of dramatic evolution. It is dividing those who realize that the 21^st century is a whole new environment, and that the innovation of lean is the key to survival, and the dinosaurs who are oblivious to the changes and are still driven by the old model of myopic focus on direct labor cost and the Alfred Sloan model of finances.

I often ask CEOs, “Who in your company is responsible for process innovation?” Nine times out of 10, the answer comes back, “It’s me” or “It’s our VP of _____ (fill in the blank with any combination of terms: Lean, Six Sigma, Quality, Engineering, Process Excellence).” But in my experience, the bottleneck that throttles innovation and excellence is almost always located at the top of the bottle. Even in today’s post cold-war world, most companies are still organized like the old Soviet Union: There’s a central hierarchy that is cleverly disguised as a perfectly sensible “review” process. An idea fights its way up through various levels of skepticism until someone near the top decides whether or not to invest in it. (For a cold-war era case study of this process, see Karen Wilhelm’s article about Chrysler’s “suggestion system” from the 1960s.)

During this multi-level review, an idea must pass rigorous financial hurdles by promising an almost certain chance of quickly creating a minimum amount of savings ($2,000 - $5,000 within a year with little risk is typical). The problem is, having a centralized review process with rigorous acceptance tests discourages both small and large, “game changing” ideas - a sure fire way of preventing any sustainable competitive advantage. (See Robinson and Schroeder’s accompanying article, “Big Results from Small Ideas” for their non-intuitive observations about this.)

An organization that is trained to look to the top for innovation is an organization where the vast majority of people have abdicated responsibility for improving their company, their job, and their professional life. When the power to implement ideas is narrowly held, organizational renewal inevitably falters.

The Soviet Union’s Politburo learned the hard way 15 years ago that centralized control doesn’t work. Unfortunately, most American companies still don’t get it.

The question is: Does yours?